Brownfields draw more attention as industrial development options dwindle

Polluted by more than a century of metal manufacturing, the 17.4-acre former Anamet manufacturing campus near the center of Waterbury has sat abandoned and decaying for nearly two decades, visited mostly by homeless individuals, drug users and vandals. The city of Waterbury and state have poured more than $5 million into cleaning and preparing the property for reuse, much of it going into demolition of crumbling buildings. An additional $4 million in state brownfield grants has been earmarked for continued cleanup. The city issued a request for proposals April 11, seeking a user or developer to buy or lease the property. Waterbury Mayor Neil O’Leary said he believes the state’s hot industrial market, coupled with tight statewide inventory, will draw more investor interest to brownfield sites like Anamet. “We think there is a significant amount of interest on that piece [of land],” even though it has a long way to go before it can be redeveloped, O’Leary said. Industrial real estate brokers and others say they are seeing a greater willingness from developers to look at brownfield properties, but they remain a challenge. “Developers — and end users to a degree — but developers specifically are taking a harder look at these types of properties,” said Kyle Roberts, first vice president of brokerage firm CBRE. Roberts said CBRE is currently floating potential brownfield redevelopments to Scannell Properties, the Indiana-based industrial builder and investor that has been one of the most active logistics space developers around Greater Hartford. The shrinking number of industrial development sites left throughout the Northeast is further exacerbated by the growing reluctance of some communities to allow further warehouse development, Roberts noted. But brownfield remediation costs are so high, they typically must be borne by someone other than the developer or end user to make a project feasible, Roberts said. That hasn’t changed. Urban opportunities At Waterbury’s Anamet site, the city will leave standing a single, 220,000-square-foot industrial building with 40-foot-high ceilings. Local taxpayers invested $2.7 million repairing the roof to preserve the building for reuse. The city is seeking a developer, even as it continues the remaining cleanup, to speed up the redevelopment timeline, said Thomas Hyde, interim director of the Waterbury Development Corp. and CEO of the Naugatuck Valley Development Corp. Several would-be users and developers have toured the site, including a couple that flew in to see it, Hyde said. Thomas Hyde, executive director of the Waterbury Development Corp. and CEO of the Naugatuck Valley Regional Development Corp., inside a 220,000-square-foot high-bay industrial building Waterbury has kept for redevelopment at the former Anamet manufacturing complex. MICHAEL PUFFER Developer interest grew, he added, after Amazon recently announced plans to locate nearby a massive regional distribution center on a roughly 150-acre site straddling the Waterbury and Naugatuck town line. Located at the crossroads of Interstates 84 and Route 8, Waterbury is closer to the Port of New York and New Jersey than northern Connecticut towns that have been the focus of logistics development in recent years. Much of that Greater Hartford activity has been spurred by the availability of affordable, flat agricultural land that has no past industrial pollution. With officials and residents in some Greater Hartford towns now contemplate stronger restrictions on logistics projects, O’Leary said he believes developers might look for alternatives in places like Waterbury. Waterbury and other Connecticut cities have long struggled with the specters of their manufacturing pasts; large properties otherwise ripe with industrial potential often sit idle for years, or even decades, due to the costs of clearing pollution. The state has responded with significant cleanup subsidies, but the cost uncertainties continue to serve as a disincentive to brownfield investment, experts said. Cleanup costs Frank H. Hird, vice president of O,R&L Commercial in Rocky Hill, said the hot industrial market has “absolutely” spurred more interest in environmentally-challenged sites. “I can’t give you a percentage, but it is absolutely increasing,” Hird said. Cities generally allow denser development, a higher building-to-land coverage ratio and greater access to sewer and water service than suburban sites, Hird noted. Hird said he recently had a single buyer lay claim to two large industrial properties, leaving him with little inventory left to offer. Art Ross, senior managing director of the industrial practice group for Newmark, agreed tight industrial inventory is bound to increase interest in brownfield sites. Ross said he recently narrowly missed a brownfield redevelopment deal in Connecticut. He said the transaction faltered when the past owner and prospective buyer couldn’t agree on how to divide roughly $10 million in known cleanup costs. The developer was willing to take on future unknown liabilities, Ross noted. Ross said Connecticut’s Transfer Act, which requires property sellers to confirm that there have been no prior hazardous waste spills on-site, remains a powerful disincentive to reuse sites with pollution histories. However, Connecticut policymakers have set into motion a process to ease those environmental restrictions. Alexandra Daum, deputy commissioner of the Connecticut Department of Economic and Community Development (DECD), noted state lawmakers and the administration have authorized spending $50 million on brownfield grants over the next two fiscal years. “That is representative of how committed we are — both DECD and the administration in general — to brownfields remediation as a tool of economic development,” Daum said. Past cleanups have resulted in an array of uses, Daum said. Industrial uses are “a great option” because the cleanup standards are lighter than other types of development, she said. State economic development authorities haven’t been deluged with additional interest in brownfield redevelopments, but builders are more willing to consider these sites, she said. “Previously it was: ‘I want a clean site, I want perfect highway access, I want a huge site, utilities perfectly connected – everything,’ ” Daum said. “That’s still the first call people make, … but I think we are seeing a bit more flexibility and open-mindedness about considering sites that aren’t perfect.” Brownfields still have challenges and limitations, especially in terms of project complexity, time and cost, Daum acknowledged. The state’s brownfield programs offer cleanup subsidies of up to $4 million, but each funding round is limited to $2 million grants. That means developers or municipalities need to apply through at least two different grant funding rounds to get the maximum award. It also takes time, and great expense, to identify areas of pollution, get cleanup plans approved and then certify it has been done correctly. “If you have a tenant that needs to be in [a location] in six months, a brownfield is probably not the right site,” Daum said. “But there are a lot of enterprising, risk-taking investors out there who might want to clean up a site knowing there will be a use for that tenant they are confident will exist three years from now.”