Phase I ESAs Rise 6% Year Over Year
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TORRANCE, CA-Three consecutive quarters of growth in Phase I Environmental Site Assessments have been noted by Environmental Data Resources Inc., a recognized industry market monitor and information-services firm. The growth continues to signal recovering property markets, since Phase I ESAs are a leading indicator of the national commercial real estate lending outlook.
In third-quarter 2012, Phase I ESA volume rose 6% year-over-year, from 48,826 in third-quarter 2011 to 51,675 this quarter. Year-to-date, 156,292 Phase I ESAs were performed in the US, up 10% from the first nine months of 2011. The assessments 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.
According to Joseph P. Derhake, president of Partner Engineering and Science, a leading national environmental and engineering-consulting firm here, most of the available capital has always gone to major global markets like Los Angeles and New York, but the report suggests capital is beginning to flow in secondary and even tertiary markets. Among the 50 major metropolitan markets, Denver and Columbus, OH, showed the largest increase in Phase I ESAs this quarter over the same period a year ago, rising a significant 32%. Following closely behind were Cleveland, OH; and Austin, with assessments up 31%, and Salt Lake City, up 27%. Partner’s principal Gary Reynolds, who heads the firm’s Denver office, said in a prepared statement, “We’re getting assignments from lending institutions all over the country who are looking at funding deals in Denver as well as Colorado Springs.”
Over the past 12 months, Austin has exhibited the strongest growth rate in Phase I ESAs in the US, with an average 30% increase for the past four consecutive quarters. Austin, combined with strong performances in Houston and San Antonio, contributed to Texas’s 18% growth in Phase I ESAs in the third quarter, according to EDR.
In addition, Florida has seen a significant rise in ESA activity over the past year, with the greatest increases in deal activity occurring in Palm Beach and Jacksonville, the latter of which has been among the top 10 major metros for three out of the past four quarters.
As GlobeSt.com reported in August, Phase I ESA volume increased 8.4% in second-quarter 2012 over the previous quarter, with 104,617 ESAs ordered in the first half of the year, according to EDR.
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