Contamination by any means can be devastating for the value of real estate. Beyond the costs of clean-up and monitoring that come with a contaminating event, there are also possible impacts to the market of potential buyers, increased costs of living (for example, the need to import water), and depressed business economics, just to name a few vectors. After remediation, the stigma of the contamination can continue to wreak havoc. The founder of Greenfield Advisors, Bill Mundy, PhD, CRE, MAI, wrote the seminal scholarly article on stigma; in the winter of 2007 The Appraisal Journal named it one of the “Nine Big Ideas” that influenced a generation of appraisers. Today our CEO, John Kilpatrick, PhD, MRICS, continues that legacy as the foremost expert on stigma.
Since the publication of that first article we’ve only deepened our understanding of these incredibly complex issues and apply this knowledge in a variety of applications. Leveraging off of the largest body of peer-reviewed published work on the topic, we are regularly called upon to value the impacts of environmental contamination on adjacent and proximately located properties in both state and federal litigation matters. The stigma impact on the real estate marketplace is particularly complex and requires our deep understanding. When possible we also assist clients outside of the courtroom, providing detailed portfolio analysis to assess contamination-related risk from investment and insurance perspectives.
The transfer or development of contaminated property also poses special complications for which we are uniquely prepared. The determination of the highest and best use of such property requires attention to both pre- and post-remediation possibilities and factoring in the economic and societal concerns with both paths. In some situations remediation is not a complete solution, so the “best use” must consider (for example) a permanent monitoring situation. Only when the long-term effect of contamination is completely understood can the appropriate way forward be determined.