What did 2010 mean to the environmental industry? Here are a few observations

As we look back at 2010, a few observations can be made by this author. First off, it appears that banks are lending once again although more conservative in their underwriting standards as well as environmental requirements on commercial loans. Foreclosures have produced some nasty environmental skeletons that were either missed in the original loan origination or the lender did not require a full phase one Environmental Site Assessment (ESA). There is a new drive from lenders to understand these potential environmental concerns prior to commencing with a new loan. Database reports and transactions screens can help in determining if an environmental issue exists but they are not as comprehensive as the phase one ESA. Phase 2 assessments have been on the rise as well from both lenders and purchasers. The phase 2 processes typically involve soil/groundwater sampling to provide more data than a phase one ESA can. That is the good news for those in the environmental consulting arena. The less than good news is that the economy is still bouncing along the bottom; unemployment has risen not dropped in 2010. New government laws on health care and Financial Regulation (FIN REG) will add layers of paperwork to all those involved. (Get ready to send Home Depot and Staples a 1099 if your purchases total over $600 this year). Property values in much of the country remain well below their high water marks of 2007 and lenders are still struggling to manage their distressed asset and real estate owned portfolios. 2011 is setting up to be similar to 2010. Distressed asset buyers will be actively hunting deals, lenders will be conservative on commercial real estate deals, and properties that have lost much of their value will probably not see any meaningful rebound. The epic events of 2007-2009 insured that it would be a while for these areas to recover. Many economists predict no sooner than 5 years while others project out as much as 10 years for real estate and unemployment to return to those "pre-Lehman collapse" days. In addition, 2010 saw pricing pressure for both the phase one and two reports remain fierce. The green or sustainable movement continues to pick up momentum. The desire to build or retrofit structures with more energy efficient equipment has never been stronger. The energy cost savings over time coupled with tax credits and local building requirements will continue to drive this industry even during a fragile economy. Building Energy Performance assessments (BEPA) have entered the marketplace and can assist commercial building owners in finding new ways to increase their bottom line by incorporating energy saving strategies. In addition political forces such as mayor Bloomberg's PlaNYC which passed in 2009 has set the stage for all buildings over 50,000 s/f to incorporate a plan to reduce energy costs 30% by the year 2030. The New York State Energy Research and Development Authority (NYSERDA) have just authorized a program to spur the building and certification of more green homes across the state. The program also includes residential mixed-use buildings that incorporate practices and technologies that lower energy costs, reduce waste and water use and improve indoor air quality. Incentives start at $5,125 for a single family home and increase to $13,375 for buildings up to 11 units. The program runs until October 31, 2013. Officially the recession has ended (according to those who track such things). If that is true and 2010 showed some positive signs, then 2011 should be better. There will always be real estate transactions. Even during the best of times, sophisticated investors found good real estate deals. Now that we are on the other end of the cycle, the next few years should present plenty of buying opportunities. That coupled with banks willing to lend money on those deals should help create a better environment for everyone. Chuck Merritt is a LEED AP and the president of Merritt Environmental Consulting Corp., Hauppauge, N.Y.