Protecting your investment starts with understanding a property's history.
When purchasing commercial or industrial property, what you see on the surface is only part of the story. A building may appear to be in excellent condition, but decades of previous land use can reveal environmental concerns that aren't immediately visible.
That's where a Phase I Environmental Site Assessment (ESA) comes in.
A Phase I ESA is designed to identify potential environmental liabilities before they become costly surprises. While it doesn't include soil or groundwater sampling, it thoroughly investigates a property's history, current conditions, and surrounding environment to determine whether additional investigation may be warranted.
Here are ten common issues that can be identified during a Phase I ESA.
One of the most common findings involves current or former underground storage tanks.
Even if a tank has been removed, historical petroleum releases may have occurred. Old gasoline stations, trucking facilities, agricultural operations, and industrial properties often have a history of fuel storage that deserves further evaluation.
Historical records or site observations may indicate that petroleum products were spilled or leaked on the property.
These releases may have occurred years—even decades—ago and could still impact soil or groundwater beneath the site.
A property's previous use often tells an important story.
Manufacturing facilities, machine shops, metal fabrication operations, printing businesses, and chemical processing facilities may have used hazardous substances that require additional review during the due diligence process.
Dry cleaners have historically used chlorinated solvents that can persist in soil and groundwater for many years.
Even if the business closed long ago, contamination can remain beneath the property or migrate from neighboring parcels.
Environmental risks aren't always limited to the property you're purchasing.
A neighboring gas station, industrial facility, landfill, or chemical storage operation may have experienced releases that could affect nearby properties. Evaluating surrounding land uses is an important part of every Phase I ESA.
Many rural and undeveloped properties have agricultural histories.
Former pesticide mixing areas, fuel storage, chemical storage buildings, or equipment maintenance areas can sometimes warrant additional investigation before development begins.
During the site reconnaissance, environmental professionals look for evidence of current or historical hazardous material storage.
Examples include:
These observations help determine whether additional evaluation may be appropriate.
A Phase I ESA includes reviews of environmental databases that identify known regulatory issues.
These records may reveal:
While inclusion in a database doesn't automatically indicate contamination, it provides valuable information during the due diligence process.
One of the primary objectives of a Phase I ESA is determining whether a property contains a Recognized Environmental Condition (REC).
A REC indicates the known or likely presence of hazardous substances or petroleum products due to a release or the potential for a release.
Not every REC requires remediation, but identifying one often leads to additional evaluation through a Phase II Environmental Site Assessment.
Sometimes the biggest finding is incomplete information.
Missing historical records, unknown previous owners, undocumented property uses, or limited environmental documentation may leave unanswered questions.
In these situations, environmental professionals evaluate whether the available information is sufficient or whether additional investigation is recommended before moving forward.
It's important to remember that discovering one of these issues does not necessarily mean a property is contaminated—or that the transaction should stop.
In many cases, the next step is simply gathering more information. Depending on the findings, this may involve a Phase II Environmental Site Assessment, where soil, groundwater, or soil vapor samples are collected to determine whether contamination is actually present.
The goal of environmental due diligence isn't to create roadblocks—it's to provide buyers, lenders, and developers with the information they need to make informed decisions and manage risk effectively.
A thorough Phase I ESA requires more than completing a checklist. It takes experienced environmental professionals who understand historical land use, regulatory requirements, and how to interpret potential environmental risks.
At Talon/LPE, we've completed Phase I Environmental Site Assessments for clients across Texas and New Mexico, supporting commercial real estate transactions, industrial acquisitions, municipal projects, energy developments, and lending institutions. Our team delivers clear, practical assessments that help clients move projects forward with confidence.
Environmental due diligence is one of the smartest investments you can make before purchasing commercial property.
Whether you're buying your first commercial building, financing a development, or expanding your operations, a Phase I ESA can uncover important information that helps you avoid unexpected costs and make informed decisions.
If you're planning a commercial property transaction in Texas or New Mexico, contact Talon/LPE to learn how our experienced environmental professionals can support your next project.