Which item is commonly reviewed to assess environmental risk in CRE due diligence?

• A. Phase I Environmental Site Assessment
• B. Marketing analysis
• C. Property tax history
• D. Phase I Environmental Site Assessment

Answer: (D)

Environmental risk in commercial real estate due diligence is typically evaluated through the Phase I Environmental Site Assessment. This assessment is designed to uncover potential environmental issues by reviewing historical property use, regulatory databases, and other records, conducting a site visit, and interviewing current and past owners or occupants. It helps identify recognized environmental conditions that could affect value, financing, or trigger cleanup requirements. If concerns are found, a Phase II assessment with soil and groundwater sampling may be pursued to confirm contamination and determine its extent. The other options focus on market conditions or financial history rather than environmental risk, so they aren’t used for this purpose.