Beneath the Sale Sign: Managing the Invisible Risks of “Floaters” and “Sinkers” in CRE

Hidden beneath the attractive facade of any property on the market may lie environmental hazards referred to as “floaters” and “sinkers”. These silent hazards cause groundwater contamination that can mean dire consequences for commercial and industrial real estate transactions. “Floaters”, or Light Non-Aqueous Phase Liquids (LNAPL’s), and “sinkers”, Dense Non-Aqueous Phase Liquids (DNAPL’s), not only pose environmental challenges but also bring significant cleanup costs that may affect investment decisions.

“Floaters” are lighter than water. These contaminants, like gasoline, are often found in gas stations and industrial sites. LNAPL’s typically contaminate the soil and groundwater interface, remaining above the water table. Remediation methods for LNAPL contamination include skimming, bioremediation and soil vapor extraction. The resulting cleanup costs can range from a few thousand dollars to around $200,000, increasing for more complex sites.

Heavier than water, “sinkers” such as PCE are found in dry cleaning facilities and manufacturing sites. DNAPL’s can contaminate deep aquifers by penetrating below the water table. Remediation for DNAPL contamination includes advanced techniques like in-situ chemical oxidation. Due to the increased complexity of the remediation methods required, DNAPL cleanup can range from tens of thousands to several hundred thousand dollars, with large-scale contamination potentially costing millions.

The potential for liability and high clean-up costs related to LNAPL/DNAPL contamination means that risk assessment is key to ensuring a good deal. Phase I and II Environmental Site Assessments must be performed to identify potential contamination. If contamination is present, continuous monitoring and treatment, particularly for “sinkers”, can add to long-term costs. Additionally, contamination can considerably reduce a property’s value and attractiveness in the long term.

For CRE investors, understanding and managing the risks associated with LNAPL’s and DNAPL’s is essential. These environmental challenges carry significant financial and legal implications. Effective risk management involves proactive detection, comprehensive assessment, and strategic remediation. For expert guidance and solutions in environmental remediation, CRE professionals can reach Phoenix Environmental at or by phone at 614.746.2695. Our expertise can provide valuable insights and services to ensure the sustainability and profitability of real estate investments.