You know – the one that buys something that does not take care of it!

All too often, we get enamored with a new toy, otherwise known as a new potential investment. When we buy with our hearts instead of our heads, we can forget to make sure that we have adequate reserves to take care of our new acquisition. Our new toy can become junk in a quick minute if we don’t budget the money to manage the upkeep.

Make sure to talk to a mortgage specialist that is a good communicator, and understand the ins and outs of buying an asset. That will keep you from being “that guy! I am Howard Freedland and that is your Echo Tip of the Week!

Set Phasers to “Green”

On the off chance that you are a Star Trek fan, you can appreciate the title of today’s piece. If not, allow me to briefly explain.  Whenever Captain Kirk sensed trouble, he would tell the crew he was with to “set phasers to stun.”  Or, if the alien was bad enough…kill. Today, though, we are not talking about phasers, but phases, and those phases refer to environmental examinations.

So, you are touring an investment property that is in the warehouse district. The building looks good from the outside, there is adequate parking, and the roof was even replaced the prior year. Oh, did I mention that the price was right in your wheelhouse? What could possibly derail the transaction? Inspector Gadget could…

Environmental site assessment phases help classify probable or existing environmental contamination liabilities. These assessments fall under due diligence and help give an accurate picture as to the amount of work needed to be put in to bring the property to a proper, healthy level.  Let’s look at the differences between the two phases of inspection.

Phase I helps build the scope and framework for the property in question. It includes interviewing the current owners for work that has been done. There are a lot of records to review, looking into whether there were hazardous materials used on site. Phase 1 also allows for research with the local government for history with the property, reviewing adjoining properties and comparing the current condition to the original site plan. The goal is to decide if the property was contaminated in the past. If warranted by the report, a Phase II assessment can be ordered. Cue up the intense music…

Phase II ESA will confirm the presence of hazardous materials on the property, helping protect a potential buyer, lender, investor, or another interested party on the transaction from environmental liability.

Another difference is Phase II assessments are unquestionably more intrusive than Phase I. In Phase I ESA (environmental site assessment), evaluators record things like deeds, aerial photographs, surveys, maps, and other essential documents and even examine records of other nearby properties. While Phase II assessment will assess more things like subsurface soil borings, groundwater monitoring well installation, minerality tests, drum sampling, sampling of dry wells, floor drains and catch basins, transformer/capacitor sampling for Polychlorinated Biphenyls (PCBs), testing of underground storage tanks and much more.

The Phase II goal is to assess actual presence of environmental contaminants. For example, if a Phase I determine if a vapor encroachment condition is likely to exist at the subject property, the Phase II will further highlight potential remedial actions that may be required to clean up the property. Determining actual costs to clean up potentially dirty land can help hold a transaction together or allow you a way out.

Just as in Poltergeist, the movie, having a more thorough inspection of the grounds may have helped “unearth” their eventual problem of the ancient Indian burial ground, your environmental tests can help save you from numerous future EPA clean up expenses. So, set your “phases” to Green, and best to you in closing that transaction!

Contact Howard Freedland for all of your commercial real estate needs!
📱 561.888.2735
✉️ Howard@EchoFineProperties.com
www.EchoCommercialProperties.com

Restaurants – Echo Commercial Tip of the week

My stomach is rumbling, but where should I go to eat? The changing landscape in commercial real estate – restaurants – today on the Echo Commercial Tip of the week.

This week, Burger Fi and Anthony Coal Fired Pizza & Wings announced that they may need to file for bankruptcy or even cease operations throughout the United States. This adds to a troublesome list of businesses that have announced concerning financials or are trying to restructure. Burger Fi has 102 locations and Anthony’s has 60, and when added to the distress of Rubio’s, Tijuana Flats, Red Lobster, Bucca di Beppo and World of Beer, we have several chains that could potentially lead to a ton of vacancies.

How does that affect us? There is always a demand for restaurant space in key areas. Delray, West Palm Beach and Jupiter vacancies could potentially be filled, but at what cost? The turn-around time for a remodel can be lengthy, and the lease rates, which were at a premium in recent times, may take a hit in the interim, causing additional financial stress to the landlords, and subsequently the banks.

Keep your eyes on additional chains announcing financial stress, as it is a good indicator of how the economy is shaping up. That will help you make good decisions if you choose to enter that sector with your latest and greatest restaurant innovation. Call me for restaurant availability. I am Howard Freedland and this has been your Echo Commercial Tip of the Week.

Contact Howard Freedland for more information on Commercial Properties!
Phone: 561.889.2735
Email: Howard@EchoFineProperties.com

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