CREJ

Page 32 — Office & Industrial Quarterly — June 2021 www.crej.com INDUSTRIAL — MANAGEMENT I ndustrial development and leasing are happening at breakneck speeds throughout the metro area as property owners try to keep up with staggering demand among all types of users. In most instances, indus- trial space is being used for com- mon business practices that are risk averse. However, industrial property owners and managers can’t afford to turn a blind eye to what may be filling their available spaces. Doing so could result in very costly, and sometimes criminal, outcomes. While it’s said that “ignorance is bliss,” that can’t be the maxim of an industrial property owner. There is too much potential for hazard- ous materials and environmental threats to be brought onto your property and quietly stored away if you and your property manager aren’t asking very direct questions and establishing specific rules and requirements as part of a lease agreement. Following are some of the steps you should be taking. n Hazardous materials. If a tenant intends to store hazardous materi- als, it doesn’t need to disqualify them as a tenant, but it must pro- vide a full disclosure regarding what the materials are and what quan- tities will be present at any given time. There are new and emerging chemicals that are newly regulated by state and federal environmental agencies and it’s your responsibility to maintain a safe property for all of your tenants. Make sure the poten- tial tenant is in compliance with all of the regulations it is required to meet. This can be done by consulting with environmen- tal specialists who are well-versed in current regulations. You also should have a provision in the lease that guar- antees that you and your environ- mental consultant will have the right to access the ten- ant’s space for regular inspections and updates on how it is maintain- ing compliance. n Environmental permits. There are numerous types of environ- mental permits that you need to be aware of as they relate to your property. For example, you and the tenant will be subject to Toxic Release Inventory reporting if there are chemicals or other forms of hazardous materials being stored on your property above threshold quantities. Request TRI reports from the tenant so that you can become aware of any compliance issues that might become a problem of your own. Other permits and compliance reports to be aware of include the Resource Conservation and Recov- ery Act generator registrations, bien- nial reports and any inspections. Be sure to obtain copies of any required permits and associated reports and reserve the right to conduct audits and inspections. n Emerging chemicals. There are new and poten- tially troubling chemicals and materials that have recently “emerged” as health and safety hazards that experts still are studying and gath- ering information about. Obviously, these unknowns present risks that you may not be comfortable with. It’s your responsibility to do your due diligence and investigate what a company intends to bring onto your property. Some examples of these new problem areas include poly- and perfluroalkyl substances and perfluorooctanoic acid substances, such as those used in making Teflon coatings. A sudden and unintended release of this substance not only presents an immediate health and safety hazard but will result in dam- age to the property and expensive removal and cleanup efforts. It’s important to be aware of the new chemicals and materials that are becoming more prevalent. n Marijuana risks. As the marijua- na industry in Colorado continues to maintain a significant foothold on the local economy, these owners, operators and growers have become a sizable tenant for industrial prop- erties. There are hazardous chemi- cals associated with marijuana that could become a nightmare for your industrial property. For example, fer- tilizers and sulfur compounds pres- ent considerable risk if they’re being stored in large quantities, not to mention molds that could become evident if plant materials are being stored. Marijuana is a huge and profitable business, but there are risks associated with it that could bring harm to your industrial prop- erty and other tenants. In addition to heavy power loads and signifi- cant water use, fertilizers, pesti- cides and growth-enhancing agents can cause contamination in, under and around buildings if there is a spill or release. n Are you doing enough? That’s not a question you want to respond to with a “No,” especially if there is an incident or accident. In order to be prepared, research and pur- chase the best insurance to cover the damage that might be caused by hazardous materials being stored or used on your industrial prop- erty. Work with professionals to be sure that your property has taken adequate steps to contain any leaks or spills. Make sure that you are following best practices and have the permits and reports in place that you might need in the future. There are obviously a tremendous number of considerations and guidelines you need to follow if you’re allowing hazardous materials and environmental risks onto your property. s patricia@resolutionsdev.com mary@resolutionsdev.com Don’t turn a blind eye to what tenants are storing Patty Gage Principal, RE | Solutions LLC Mary Hashem Principal and co-founder, RE | Solutions LLC