Robert Colangelo believes brownfield redevelopment will continue to grow in
volume and value as more empty-nested baby boomers move back to cities to enjoy the amenities of urban life.
In fact, Colangelo is betting on it.
Two brownfield redevelopment companies, Chicago-based Brownfield Development LLC owned by Robert Colangelo, and Santa Fe, Calif.-based Meridian Development LLC, merged recently to form a new brownfield development company called Terra Vita Development LLC.
The merger enables the two brownfield redevelopment firms to expand their national reach.
Colangelo was invited to be a featured speaker at the Small Business Times Commercial Real Estate & Development Conference at the Pfister Hotel in Milwaukee on Nov. 9.
Colangelo is a renowned brownfield development expert. He is the founder and executive director of the National Brownfield Association and the Brownfield News. He also is a developer who redevelops brownfield sites.
“I like redeveloping brownfields, the idea of taking something dirty and making something good out of it,” he said. “It is fun to go into vacant areas and give them life.”
Colangelo said he is currently looking at three contaminated sites in the Milwaukee area that he might purchase, clean up and redevelop. He declined to disclose the locations of those properties.
Each brownfield site is unique with its own issues, in terms of contamination and potential future uses, Colangelo said.
“It all depends on the location, the socioeconomics, politics, market conditions, types of contaminants and whether the contaminants are in the soil, groundwater or both,” he said. “Most importantly, it depends on what the community wants.”
Developers interested in redeveloping a brownfield site should first team up with the local governmental entity, Colangelo said. Working with state agencies is also helpful to receive technical assistance, liability relief and financial incentives, he said.
“Most brownfield developers start out by (figuring out) what the mayor wants, what the community wants and if those needs fit the market demand,” Colangelo said.
Some brownfield sites are not appropriate for some redevelopment uses, Colangelo said. For example, some sites cannot become residential developments because the cost of the additional cleanup required does not make economic sense, he said.
When trying to decide if he should purchase a brownfield, Colangelo said he always tries to determine if his company can make the cleanup and redevelopment work profitably.
“We have too much overhead to work on smaller projects,” Colangelo said. “Typically, we are looking at 20 or 30 acres and above. Mid-market projects.”
Colangelo holds a master’s degree in hydrogeology and worked on cleaning up contaminated sites before he ventured into brownfield redevelopment. He wrote a book on how to identify environmental hazards at property transfers. When he wrote the book, Colangelo became involved with bankers, lawyers and real estate professionals, which led him to the transactional component of contaminated site cleanup, he said.
“I had the technical background and capital, and there was a gap in the market on valuing impaired properties,” Colangelo said. “Once I knew how to appraise and value a property, I was able to buy a contaminated site. I started the magazine, and then I started the trade association.”
The first contaminated site that Colangelo purchased was a 26-acre industrial park in Chicago. He redeveloped the property into a mixed-use commercial and residential development.
The National Brownfield Association is the only nonprofit educational organization that promotes responsible redevelopment of brownfields on a national scale. Its more than 1,200 members include property owners, developers, investors, service professionals and representatives from government organizations. The association has 19 chapters and six in the process of launching in the United States and another chapter was recently started in Canada.
Brownfield News boasts a circulation of about 10,000.
“One of the first things people ask us is about criteria (to redevelop a brownfield), and we try not to be too specific, because we always try to figure out how to make a deal work,” Colangelo said.
The most complex issue for a brownfield development project can be financing. Often, it takes an investment more than $10 million to acquire and cleanup a brownfield site, plus additional funds needed for a vertical build-out, Colangelo said.
Developers need to understand the debt equity sources available and all financing options before moving forward with an acquisition, he said.
Despite the obvious challenges, brownfield redevelopment is a growing market that isn’t going to cool off anytime soon, Colangelo said.
“The brownfield market continues to merge and change, and I think we will continue to be an en vogue market, just because there are so many people moving back into urban areas, and there is a shortage of space,” he said.
