Environmental Law

Pace of Pennsylvania Brownfield Remediation Tied to National Economy

By M. Joel Bolstein

I can't point you to any hard numbers or statistics, but my instincts tell me that brownfield redevelopment work in Pennsylvania is down.  Why?  It's all connected to the national economy. 

Years ago, when the housing market was booming, developers were looking at every brownfield site in Southeast Pennsylvania as a possible location for new houses.  I worked on many brownfield projects that turned old manufacturing sites into townhouses or condominiums.  Now, with the housing market still mired in the recession, few, if any, brownfield developers are actively looking for new residential development projects.  Yes, there are townhouses and condos being built on brownfield properties (for example, in Ambler Borough, Montgomery County), but builders are not climbing over one another to get those projects like they used to.  Last week, I was at a fundraiser and sat next to a senior executive for one of the largest home builders in the country.  I asked him how things were going and he replied "things are slow".  He went on to say that his company was completing work on existing projects but wasn't really starting any new projects.  He did say that he thought things would be picking up next year. 

Aside from housing, brownfield redevelopers that take ownership of industrial properties and then lease them out are finding that tenants are having a much more difficult time paying rent.  Also, it's harder to find new tenants for those buildings because companies aren't expanding as rapidly.  That means that brownfield developers are spending more time just trying to keep their existing properties fully leased and have less time available or less inclination to look for other brownfield properties to redevelop.

I'll tell you where I do see active brownfield redevelopment work in PA.  I see it in the smaller sites where brownfield redevelopers are converting old corner gas stations into drugstores and banks.  I see medical providers, like MRI centers and dialysis centers, looking for properties for those expanding businesses.  I am working with one company that is looking to put a dialysis center in a former car showroom in Philadelphia.  The car dealership went out of business and the building is in an ideal location, within a major population center where people need those medical services.    

Do I see any other signs that brownfield redevelopment activity is picking up?  One sign is that a client that is in the soil remediation business told me that they've recently starting hiring again as a result of an increase in remediation projects.  They see companies freeing up capital for long delayed projects.  I've also read articles about stimulus money going to tank cleanups and site remediation, but I have yet to come into contact with any consultants or developers working on those projects.  I'm sure they are out there, but it's hard to tell. 

I also see lots of alternative energy projects, like solar, being built on brownfield projects.  Alternative energy projects are great opportunities for brownfield developers to add value to their projects on the back end.  For example, if you have a large site that needs to be capped, what better way to maximize returns then to put a solar energy system on top of the cap.  Alternative energy credits can be sold to retail electric providers who need to add solar to their energy portfolios.  There are also significant tax benefits and grants that can make these projects profitable.  Are they happening?  Yes.  I'm working with one client on putting a large solar panel array on the roof of their corporate headquarters in Montgomery County.  I'm working with another on investigating the possibilities of putting in a solar array on top of an old landfill.  

I'm an optimist.  I'd like to believe that 2010 and 2011 are going to be boom years for brownfield developers.  We saw what happened with cash for clunkers when car buyers were given incentives and they came out in large numbers.  I think the same pent up demand will be out there for real estate and brownfield developers who will see significant opportunities in the near future. 

My advice to all as we head into the fall is to keep looking for opportunities and stay in close contact with your brownfield developer clients, colleagues and friends.  You don't want to be caught napping when this recession ends and projects start picking up.   

Full post as published by PA Brownfields Environmental Law on August 28, 2009 (boomark / email).