Northeast Florida experts share their insights into the commercial real estate market at the end of the 2nd quarter of 2022.
By Kyle Hayes & Gordon Steadman | Terricon
Terracon has had a productive year, with the environmental service lines leading the trend.
We attribute our success to commercial developers, land speculators and end users expanding their portfolios in North Florida.
Limited raw land availability in trending market locations has posed a challenge.
Trending development includes logistics and distribution, multifamily residential, and riverfront adaptive reuse. With redevelopment of these sites, environmental concerns often can create challenges.
There are a multitude of environmental conditions that can impact the balance sheets for redevelopment project success.
Over the years, it has been common for our clients to pursue due diligence and walk away from deals at the slightest hint of environmental concerns. The current market does not afford our clients this luxury and appears to have shifted the risk tolerance pendulum.
We are noticing that more clients are anticipating the need for environmental assessment or cleanup and taking this on without hesitation.
Although land availability or desirable parcels are limited and creating a need to redevelop parcels with extensive historical use and environmental assessment, we also have noted that both developers and lenders are savvier on environmental matters.
We have observed an influx of larger affluent developers who are accustomed to the complications and costs associated with environmental matters, based on their experience in other markets.
Additionally, lenders have become educated on the environmental regulatory closure options and become more amenable to the acceptance of risk-based site closure options that provide for contaminated media to remain on sites with controls in place to safeguard the public and surrounding environment.
These market trends also have highlighted a significant increase in our commercial real estate clients prospecting brownfield sites and working with us to obtain tax incentives for environmental cleanup.
The density of development also has had a significant impact on the need of our clients to account for increasing costs associated with wetland permitting and mitigation, surveying and relocating threatened and endangered species, namely the gopher tortoise, and incorporation of cultural resources assessments.
Going into the second half of the year Terracon still is seeing multiple opportunities in all our service lines in Northeast Florida. As all businesses today we are closely watching the economy and will react to the market accordingly.
Overall, we see the movement on new development promising.
Kyle Hayes is Terracon Senior Associate and Environmental Department Manager. Client Development Manager Gordon Steadman is a 2022 NAIOP Commercial Real Estate Development Association Northeast Florida Chapter Director-at large.
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