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How a Geologic Review Can Avoid Costly Issues during Construction Projects and Transactions

Many people know how frustrating and costly delays can be during a home renovation or construction project.   In the world of commercial real estate, this issue is further exacerbated in terms of scale and impact.  One way to keep costs down and schedules on time during a commercial construction project is to get a geologic review during the due diligence phase of the project.

Unforeseen subsurface conditions or geologic hazards (which can include anything from sinkholes, fault lines, and old abandoned mine shafts) can drastically alter the economics of a real estate development by increasing costs and delaying schedules.  To better understand the feasibility of a project, CRE owners and lenders can get a better sense of what kind of issues can be expected during the construction project by conducting a Geologic Review or a geotechnical investigation.

What is a Geologic Review?

A Geologic Review offers a high level assessment of a site, and can be done quickly, inexpensively, and without much interruption to the construction projects.  Although a full geotechnical investigation provides much greater detail on subsurface issues, a basic geologic review can be an attractive screening tool for those who are under tight schedules or who require just a preliminary assessment of pertinent risks.

A Geologic Review can be done on both existing buildings and new build projects. In the planning and design phases, preliminary geotechnical evaluations, geotechnical evaluations, foundation bearing evaluations, and pavement designs are advised and/or required, and the critical soil information is used by other design professionals and general contractors to properly size structural elements and plan for the right construction techniques.

A Geologic Review is often performed during the due diligence phase and is used to evaluate the potential for geologic hazards, difficult site conditions, and/or poor quality site soils. In order to perform the assessment, a professional conducts research and performs document review to determine the presence of potential risks.  The professional may consult state and quadrangle maps, state geologic survey documents and web resources, Google Earth Historic photographs and EDR photographs (if done alongside a Phase I Environmental Site Assessment), USGS topographic maps, active fault lines, and seismic design criteria, USDA Soil Survey Website, previous ALTA surveys, Phase I ESA and Property Condition Reports, as well as project site plans and structural data.

The Value of a Geologic Review

Understanding how geologic issues may affect a construction project is critical to protecting against losses, delays and/or liabilities. And getting one early on in the deal process makes a lot of financial sense.  For example, when buying a property any risks identified in the geologic review can be used to negotiate on the sales price, or ask the seller to address risks before taking on the asset.   Of course, obtaining a streamlined geologic review first to determine if a full geotechnical investigation is warranted can save on upfront costs. The more informed our clients are going into a deal, the better they will be able to make business decisions.  When it comes to understanding risks posed by geologic conditions, investing in a geologic review can really pay off in the long run.

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