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Post Recession: A New Phase for Environmental Assessments?

How did the recession change environmental due diligence? Partner's Jenny Redlin examines the trends of post-recession Phase 1 Environmental Site Assessments.

By Jenny Redlin | Updated on July 11, 2011

The economy is not out of the woods yet, but the seemingly long slow recovery has led to some new trends in the Phase 1 Environmental Site Assessment Due Diligence world.  Phase 1 ESAs post-recession are seeing “tightening” on several fronts – risk tolerance, turnaround time, pricing – as well as some different players in the market, leading to a new landscape for environmental due diligence.

Environmental Risk Tolerance

During the recession, many banks were burned by fast and loose underwriting, as well as lean environmental due diligence policies.  Many found themselves asking “How did this contaminated site end up in our portfolio?” and “What do we do with this risk now?”  As a result, many portfolio lenders are tightening their due diligence policies and have a much lower risk tolerance.  Agency lenders have also revised and tightened their Phase 1 Environmental scope of work, and the re-emerging CMBS market is taking a second look at their policies and procedures.  We have seen this first hand manifested as higher scrutiny of particular environmental concerns, such as asbestos and vapor intrusion.

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