7 Environmental Red Flags in Commercial Property Transactions

When it comes to commercial property, doing your homework is essential—especially when it comes to environmental risks. Environmental Site Assessments (ESAs) help reveal hidden liabilities that could pose financial or regulatory challenges. Here are the top environmental red flags that every commercial property buyer should be aware of:

1. Previous Industrial or Commercial Use
Properties that once housed industrial operations or commercial businesses, such as gas stations, dry cleaners, or manufacturing plants, are more likely to have environmental concerns. These operations often used or stored hazardous materials that could lead to contamination.

2. Proximity to Gas Stations or Auto Repair Shops
Underground storage tanks (USTs) for gasoline or chemicals are common sources of soil and groundwater contamination. Even if tanks were removed, residual contamination can remain. Testing for hydrocarbons and solvents is crucial for properties near these sites.

3. Visible Dumping or Waste Storage Areas
Dumping sites, whether used legally or not, pose risks for contamination from various materials. This includes heavy metals, hydrocarbons, or other industrial chemicals. Visible signs of waste storage may signal a need for further assessment.

4. Older Buildings with Potential Asbestos or Lead Hazards
Buildings constructed before the 1980s may contain asbestos materials in insulation, flooring, and ceiling tiles, as well as lead-based paints. Asbestos and lead are hazardous materials that can pose health risks if disturbed during renovations or demolitions. A Hazardous Materials Assessment will help ensure safety compliance.

5. Evidence of Petroleum or Chemical Odors in Soil
Strong petroleum or chemical smells can indicate the presence of contamination from fuels, oils, or solvents. This may stem from underground spills or previous improper disposal methods. If these odors are detected during a site visit, further investigation is highly recommended.

6. Environmental Violations on Record
Properties with a history of environmental violations may indicate past contamination issues that have not been resolved. Checking for regulatory compliance and historical violations can reveal red flags about a property’s environmental status.

7. Nearby Dry Cleaners or Manufacturing Facilities
Businesses like dry cleaners often use chemicals such as perchloroethylene (PCE) and trichloroethylene (TCE) for cleaning processes. These solvents can seep into soil and groundwater and may migrate, causing potential issues for nearby properties.

Protect Your Investment with a Phase I ESA
When considering a commercial property, an Environmental Site Assessment is your first line of defense against environmental liabilities. A Phase I ESA can help identify these red flags early on, offering you peace of mind and guiding your decisions. At Nexus Environmental, we specialize in helping buyers, sellers, and lenders uncover potential environmental risks so that transactions can proceed smoothly.

Sam Seigl C.Tech CESA
Sam Siegl is the founder and principal consultant of Nexus Environmental Services Ltd., based in Lethbridge, Alberta. With over a decade of dedicated experience in the environmental consulting industry, Sam specializes in Phase I, II, and III Environmental Site Assessments for commercial and industrial properties. Sam can be reach at info@nexusenvironmental.ca