From Brown to Green

By Glenn StockEnvironmentally contaminated industrial sites can become valuable assets for their owners and for their communities.

Retired industrial properties with environmental problems β€” brownfields β€” can weigh heavily on the minds of managers and the balance sheets of their corporate owners. Traditionally, such sites have been viewed as major liabilities, given the cost and complexity associated with large-scale environmental cleanup.
But the national trend toward urban infill and smart growth makes brownfields β€” even ones with significant environmental issues β€” potentially monetizable assets for their owners. A select group of developers has become sophisticated at turning old factories, refineries, military bases, airports, and other industrial sites into revitalized, economically productive urban properties.
The list of successfully remediated properties in the U.S. continues to grow. In San Francisco, the 303-acre Mission Bay project is rising out of the ground on the former site of a Southern Pacific railyard, associated warehousing interests and several bulk petroleum distribution facilities. Nearby, in the town of Hercules, Calif., a thriving new residential community has been built on the site of an old oil and asphalt refinery. In Woodbridge, N.J., land that formerly housed chemical and wood-treatment plants is being redeveloped into a new, 3-million-square-foot distribution park, complete with restored wetlands.
Of course, not every brownfield site has such potential. But many do. Owners of these sites β€” often large industrial corporations β€” should consider positioning these properties for redevelopment if they have the following characteristics:
β€’ Location in strong market:  Many of the most viable redevelopment options exist for brownfields that are located in urban markets with good real estate fundamentals, including a growing population, land constraints and a solid base of high-quality jobs. Places like metropolitan New York, Boston, San Francisco and central Los Angeles all fit this description.
Where within these areas do you find ideal locations for redevelopment? Sometimes, these sites are in sub-markets that are coming into their own as new urban centers or β€œedge cities.” While these locations are close enough to make commuting or serving city customers feasible, they’re also well-positioned to take advantage of growth in the suburbs. In other places, such as fast-growing Sunbelt cities, brownfield sites lie on what used to be the edge of town, but have now been leapfrogged by urban growth.
β€’ Robust existing infrastructure. A successful brownfield project needs the road and rail links, energy, water, and telecom systems that can support dense development. Many medium-to-large industrial sites already have much of this infrastructure β€” or at least are close enough to the existing grid to make extensions feasible.
Indeed, in many metro areas road and rail links and utility infrastructure were constructed and extended in the first place specifically to serve the industrial property in question. While upgrading aging systems can be an expensive proposition, in a mixed-use context one often sees public/private partnerships established to allow developers and owners to defray these costs, in light of the increased tax base and economic activity the project will provide.
β€’ Manageable levels of contamination. Some sites, of course, are just too dirty to make private redevelopment feasible until after a major public-sector-driven cleanup effort, which can take years and cripple efforts to respond to market drivers for redevelopment. However, this is the case much more rarely than people think.
What’s more common is that communities perceive contamination as being more problematic than it actually is, and that perception creates political obstacles to good redevelopment ideas. Many industrial site owners have deep environmental expertise within their firms; these professionals need to work in partnership with developers, regulators, and community stakeholders to ensure that remediation plans are not only effective but trusted.
β€’ The right relationships with local jurisdictions. Many industrial site owners have long been major employers, landowners, and corporate citizens in their communities. These relationships translate into working political capital that can be brought to bear to build support for the necessary entitlements, incentives, and approvals for a brownfield redevelopment project.
If a brownfield site is widely viewed as an eyesore and detriment to its community, and if it’s had a stormy history β€” such as with an unpopular plant closing β€” it may be better for the owner to stay in the background. But in most cases, redevelopment will proceed better and create a higher-quality outcome if all stakeholders β€” including incumbent property owners β€” are able to coalesce around consensus goals and strategies for achieving peak results.
The bottom line: Creative thinking can help developers, property owners, and communities see past the inherent difficulties of remediating and redeveloping a brownfield site. While such projects are no doubt challenging, there are rich rewards to be reaped by turning an obsolete brownfield into a high-quality new destination that meets its community needs.
Glenn Stock is vice president of development with Catellus, a mixed-use master development company based in Denver. For more information, visit their website