September 28, 2017

Survey: Farallon Consulting

Photo from Farallon Consulting [enlarge]

Farallon is doing a remedial investigation and feasibility study for Prologis’ first multistory warehouse in the U.S. The building could be finished next year in Seattle’s Georgetown neighborhood.

Specialty: Environmental consulting and engineering services

Management: Amy Essig Desai, CEO, principal scientist and member; Riley Conkin, principal geologist and member; Cliff Schmitt, principal hydrogeologist and co-founder

Founded: 1998

Headquarters: Issaquah

2016 revenues: $15.4 million

Projected 2017 revenues: $16.5 million

Projects: Remedial investigation and feasibility study for Prologis warehouse in Seattle; environmental due diligence during the land assemblage for development of an NBA and NHL arena in Seattle’s Sodo neighborhood; characterization, remediation, and mediation and litigation support on redevelopment projects in Seattle’s South Lake Union neighborhood

The DJC asked Cliff Schmitt, co-founder of Farallon Consulting, about trends and issues in the industry. Here is what he said:

Q: How might a second Amazon headquarters affect the local design industry?

A: Seattle was a hub for the computer, aerospace and biotechnology industries long before Amazon, and that won’t be affected by an Amazon headquarters in another city. Amazon’s success fueled local job growth and redevelopment at a furious pace, but that rate isn’t sustainable, and some slowdown is inevitable.

Since Amazon started expanding in the Lake Union area, the pool of properties available for redevelopment has been shrinking, and many of those remaining have significant environmental and engineering challenges, making them less economically viable for redevelopment. As Amazon’s consumption rate of new space slows, we anticipate development in areas outside the Mercer Corridor, creating opportunities for strong but less overheated growth in the architecture and engineering industries.

Q: What’s the next frontier for sustainability?

A: Sustainability will move beyond efforts to reduce carbon emissions in homes and workplaces, to encompass climate mitigation and resilience. Environmental remediation cleanup plans will need to ensure properties are more resilient to climate change impacts, such as the recent storms and flooding in Texas and Florida and wildfires in the West. Sustainability will expand to also include economic revitalization and other community improvements — returning contaminated areas to productive uses, creating jobs, and providing sustainable infrastructure such as offices, parks, housing and transit.

Q: What is the biggest environmental issue in real estate?

A: Developers have already acquired most properties with low to moderate environmental contamination. Many of those remaining have significant environmental issues that make them challenging to redevelop. Obtaining financing for those properties is impeded by the need to obtain regulatory closure within a reasonable time frame and within a reasonable budget.

There currently is no viable pathway for regulatory closure of complex contaminated properties based on risk-based cleanup standards, and the staffing resources at the state Department of Ecology are overwhelmed. It can take years to review and process cleanup documentation, so some developers and lenders are not seeking Ecology’s opinion on the sufficiency of cleanups, but are relying on environmental consultants and their counsel to make that determination.

Q: How has technology changed what you do?

A: Advancements in technology let us organize and evaluate ever-increasing volumes of environmental data more quickly even as environmental regulations become more complex.

Database management systems such as EarthSoft’s Environmental Quality Information System can manage and store lab and field data electronically. This system allows us to export environmental data to regulatory databases, and integrate the data with geographic information systems so we can model the data such as groundwater flow directions and contaminant plumes and view it in 2-D and 3-D. This streamlines evaluation of site conditions and communication of that data to clients and regulatory agencies.

Q: Do you expect your industry to be hurt by federal cutbacks?

A: Environmental consulting firms that target large-scale federal contracts will be stressed by rollbacks in environmental regulations and severe reductions in federal funding. However, the future growth of most small- to medium-sized environmental consulting firms specializing in private-sector projects or local public-sector work is more tied to Washington state-specific environmental regulations. Although they likely will be affected by a decline in the frenzied pace of redevelopment near-term, they are unlikely to be significantly affected by changes in federal regulations.

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