A lot of industrial property owners avoid selling because they’re worried about environmental issues. Maybe the building was a machine shop for 40 years. Maybe there were underground storage tanks at some point. Maybe the property next door had a dry cleaner and you’re worried about migration.
I get it. Environmental stuff sounds scary. But in my experience, it’s rarely a dealbreaker. It’s usually just a pricing factor.
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Historical Use: What industries have occupied the building? (Manufacturing, printing, automotive, fuel storage, chemical use all increase risk) -
Previous Contamination: Has there ever been a documented spill, leak, or environmental incident? Do you have documentation of remediation? -
Utility Tanks: Are there underground storage tanks? (Old heating oil, fuel tanks, chemical tanks?) Are they still in ground or removed? -
Current Operations: Does your current tenant operate in a way that could create environmental liability? (Auto repair, dry cleaning, food processing all carry risk)
What I see most often
Petroleum contamination from old USTs. This is the most common environmental issue in industrial properties. The tanks may have been removed years ago but there’s residual contamination in the soil. Both North Carolina and South Carolina have cleanup programs for this. NCDEQ has the UST trust fund, SCDHEC has a similar program. In many cases, cleanup costs are partially reimbursable.
Hiding Environmental History Backfires
Some sellers think environmental issues will go unnoticed if they’re quiet about them. They won’t. Phase I environmental assessments are standard buyer due diligence. Buried storage tanks, historical spills, and previous contamination will surface. If a buyer discovers environmental liability that you should have disclosed, they’ll either walk away, dramatically reduce their offer, or require you to pay for remediation anyway. Disclose upfront, get Phase I and Phase II done if warranted, and price the property accordingly. Clean disclosure plus known remediation is worth more than hidden history.
Solvent contamination from manufacturing or dry cleaning operations. This one’s more serious because chlorinated solvents can migrate in groundwater. But it’s still manageable with proper remediation.
Lead paint and asbestos in older buildings. Present in most pre-1980 industrial buildings. Not a crisis as long as it’s managed properly. Encapsulation is usually cheaper than removal.
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How I handle it
I order a Phase I on every deal. If the Phase I flags something, we decide whether a Phase II is needed. If the Phase II confirms contamination, I get remediation estimates and price it in. The purchase price reflects the cleanup cost. Simple.
I’ve bought industrial properties in Spartanburg and Charlotte with known environmental conditions. In every case, we got it figured out. The key is transparency. If you know about issues, tell me upfront. Surprises during due diligence kill deals. Known issues that are properly disclosed? Those are just numbers on a spreadsheet.
What sellers should do
If you think your property might have environmental issues, don’t let that stop you from exploring a sale. Get a Phase I done yourself if you want peace of mind ($2,500-4,000). Or just call me and be upfront about the history. I’ll factor it in and give you an honest number.
Seller takeaway
Environmental issues are survivable if disclosed and documented. If your building has environmental history and you want to know how it impacts value, call Roth Capital at 704-600-3839. We’ll walk through the issues and help you figure out the right way forward.
The worst thing you can do is sit on the property forever because you’re afraid of what an environmental review might find. 704-600-3839.
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