TORRANCE, CA – The volume of Phase I Environmental Site Assessments (ESAs), a leading indicator of the national commercial real estate lending outlook, increased by 6 percent in the third quarter of 2012 when compared to the like period of 2011. Moreover, the rise caps three consecutive quarters of growth of this key quarterly barometer, and thus continues to signal recovering property markets, according to Environmental Data Resources, Inc., a recognized industry market monitor and information services firm.
Phase I Environmental Site Assessments (ESAs) are done as due diligence prior to most commercial real estate transactions and financing, so ESA providers and market monitors have a unique boots-on-the-ground perspective on the CRE market.
“Most of the available capital has always gone to major global markets like Los Angeles and New York, but significantly the report suggests capital is beginning to flow in secondary and even tertiary markets,” said Joseph P. Derhake, PE, President of Torrance-based Partner Engineering and Science, a leading national environmental and engineering consulting firm.
Among the 50 major metropolitan markets, Denver, CO, and Columbus, OH showed the largest increase in Phase I ESAs this quarter over the same period a year ago, both up a hefty 32 percent. Right behind were Cleveland, OH, and Austin, TX, with assessments up 31 percent, followed by Salt Lake City, UT at 27 percent.
“We’re definitely seeing an increase in investment activity in Denver, particularly for multifamily assets where vacancies are at a 10-year low and rents are on the rise,” said Partner Engineering and Science Principal Gary Reynolds who heads the firm’s Denver office. “We’re getting assignments from lending institutions all over the country who are looking at funding deals in Denver as well as Colorado Springs.”
Austin, TX has exhibited the strongest growth rate in Phase I Environmental Site Assessment’s in the United States over the past 12 months averaging a 30 percent increase for four consecutive quarters. Austin, combined with strong performances in Houston and San Antonio contributed to Texas’ robust 18 percent growth is Phase I ESAs in the third quarter, according to EDR.
Florida is also seeing a dramatic pick up in ESA activity over the past year, with the greatest increases in deal activity occurring in Palm Beach and Jacksonville which has been among the top 10 Major Metros three out of the past four quarters.
In the third quarter of 2012, the number of Phase I ESAs performed in the United States increased 6 percent to 51,675, up from 48,826 in the third quarter of 2011. Year-to-date 156,292 Phase I ESAs were performed, up 10 percent from the first nine months of 2011.
As Covered by Commercial Mortgage Alert on November 9, 2012.
