How Green Is Your Apartment?
- Sep 09, 2011
New York—It’s no longer a case of “buyers beware” for perspective multifamily owners—at least in terms of green issues. A new report system from Environmental Data Resources Inc. (“EDR”), called the Environmental Issues Report (“EIR”), can show the environmental issues within a one-mile radius of an address.
According to Jack Huntress, VP residential services, EDR, commercial real estate transactions were subject to environmental screenings and due diligence during the transaction process. Recently, this mindset has emerged for residential properties.
That means a clean environmental report could lead to more renter; however, a report that reveals that the area is polluted could yield the opposite.
“HUD introduced a mandate to screen all multifamily housing for vapor intrusion potential,” Huntress tells MHN.
Additionally, some relocation companies have begun to consider due diligence an important part of their process.
“At the point of acquisition, even if it is not required, a potential buyer would be well-served to do some level of environmental screening to reduce the risk of acquiring an asset that has some contamination related to it,” Huntress says.
There are several issues that the EIR could indicate about a particular address. Contaminated soil can occur if local dumping activities leave behind high levels of metals, chemicals or other contaminants. Ground water can become contaminated if a gas station, dry cleaner, etc. spills chemicals. Unsafe conditions can also occur if the property previously housed a drug lab.
One of the major environmental issues for apartments includes vapor intrusion. “Multifamily owners would be well served to consider vapor intrusion (encroachment) screening as part of their process, as it is likely to become mainstream and may be demanded by tenants,” Huntress says. “Beyond vapor encroachment, if they buy a relatively older complex they may want to screen or even test the soils where kids and even adults may be outside.”
It is also recommended that owners test the water in private wells. Additionally, since conditions change all the time, it is important to continually monitor any potential releases in the area.
If these environmental issues are reported, owners can, and should, alleviate some of the damage.
“A multifamily owner can improve their position by showing that they did some level of due diligence and are monitoring their property for any potential changes,” Huntress says. “We would like to ultimately see some level of due diligence and monitoring [become] part of all housing-related considerations.”