Environmental Due Diligence for New Investors, Part I – Understanding Your Phase I ESA

A collage showing a Phase I ESA checklist being filled out on a clipboard, two waste drums in a grassy area and another drum labeled "hazardous waste".

If you are a new commercial real estate investor, you might find yourself a bit lost in the maze of property assessments and environmental due diligence (EDD). It’s a common feeling! One common step before closing the deal is completing your EDD activity.  Oftentimes, this is a Phase I Environmental Site Assessment (ESA).  This brief guide is here to help you grasp its essentials before diving into your real estate adventure.

What is a Phase I Environmental Site Assessment?

A Phase I ESA is essentially an environmental check-up for a property. Its aim is to pinpoint potential environmental contamination sources (e.g., leaking drums, buried tanks, chemical spills, etc.). It’s a common step for most deals before you can buy, sell, or refinance real estate. The process includes three main steps: a historical review, site reconnaissance, and interviews with people who know the property well. The goal? To understand the property’s past and present use and spot any red flags for contamination now or in the future.

Understanding the Process

Historical Review: Here’s where detective work comes into play. The property’s past is pieced together using various resources like aerial photos, business listing records, topographic maps, fire insurance maps, and a variety of government databases. This step is crucial for spotting signs of current or past activities that might have contaminated the site.

Site Reconnaissance: An environmental professional will visit the property. The EP combines what they learned from the historical review with their own observations to assess the property’s current condition. This visit is key for spotting any obvious contamination signs or hazards.

Interviews and Neighboring Properties: Talking to people with insights into the property, like owners and occupants, is invaluable. Sometimes, even the neighboring property owners, local government personnel or local historians are interviewed to get the “big picture” of the site’s history and history of the surrounding properties. 

Analysis and Recommendations: After gathering all this information, environmental professionals analyze it thoroughly. They then recommend what to do next, tailored to the property’s unique environmental situation. It’s important to note that Phase I ESAs don’t involve sampling or lab tests at this stage. It’s all about identifying potential contamination risks and planning how to manage them.


For you, the budding real estate investor, getting to grips with Phase I ESA’s is crucial. They lay the groundwork for understanding a property’s environmental risks and guide the steps needed to complete the environmental due diligence process. By appreciating the importance of historical digging, on-site inspections, and expert analysis, you can make smart decisions that protect your investment.

Contact Phoenix Environmental today, and let us help you navigate through the EDD process with confidence. We know how to bring environmental science down from 30,000 feet to ground level, where it’s practical and understandable for you, the new investor.