Brownfields to Billions: Unlocking CRE’s Most Overlooked Opportunity

Drive through almost any older industrial corridor in the Midwest and you will find them: shuttered factories, vacant lots, weeds growing through cracked asphalt, smokestacks standing against the skyline with nothing left to do. These are brownfields, and for most people, they register as eyesores or problems to be solved by someone else. For a growing number of developers and investors, they represent something else entirely: some of the most actionable value-add opportunities in commercial real estate.

On a recent episode of the Real Finds Podcast, Gordon Lamphere sat down with Sam Haydock, Principal and Director of Business Development at BL Companies, to break down what brownfield redevelopment actually involves, where the real risks live, and how smart developers are using public grant programs to make projects pencil that would otherwise be dead on arrival.

What Qualifies as a Brownfield

The definition matters more than most people realize, particularly when public funding is on the table. Haydock frames it around two core criteria: the property must be either abandoned or underutilized, and there must be real or perceived environmental contamination serving as an impediment to reuse.

That second element, perceived contamination, is worth pausing on. Many sites sit idle not because testing has confirmed a serious problem, but because no one has bothered to test them. Stigma drives avoidance, avoidance drives vacancy, and vacancy compounds community decline. In practice, a Phase I environmental site assessment and a Phase II if warranted, can resolve that ambiguity relatively quickly. Properties that get tested often come back cleaner than their history suggests.

The flip side is that contamination on sites with genuine issues can be severe and expensive. Soil and groundwater problems from decades of industrial operations, asbestos and lead in older building stock, and PCBs embedded in caulking and paint materials are the primary cost drivers. PCBs in particular have emerged as a major issue over the past 15 years. They leach from caulking into brick and concrete substrates, and in some cases require removing multiple courses of brick to reach clean material. That is not a budget line item that surprises you pleasantly.

Due Diligence Is Multifactorial

Developers evaluating brownfield sites need to run parallel due diligence tracks simultaneously. Environmental assessment is one track. Physical condition of existing structures is another: column spacing, ceiling height, structural integrity, MEP systems, ADA compliance, and egress. Infrastructure availability covers water, sewer, electric, and gas. Zoning and entitlement complexity determine the timeline. Market demand determines whether the project vision has any basis in reality. And public support, particularly when government grants are involved, can make or break a project in certain municipalities.

The investors who move fastest on these deals are the ones who have built a team that can run all of these tracks concurrently rather than sequentially. Waiting for environmental results before starting structural review adds months to a process that is already long.

The Conversion Debate: Residential vs. Industrial

One of the more pointed observations Haydock offered is that the current push to convert brownfield sites to residential use may be overcorrecting. Housing demand is real and well-documented, and industrial-to-multifamily and office-to-residential conversions are happening at scale across markets like Connecticut and the broader Northeast. But Haydock argues the industry risks hollowing out the industrial and manufacturing base that communities still need.

Modern industry is not what it was. Precision manufacturing facilities today generate minimal noise and negligible odor. Many operate quietly alongside residential neighborhoods with neighbors who have no idea a factory is there. Reserving some portion of well-located brownfield land for light industrial, advanced manufacturing, or incubator space may serve long-term community interests better than defaulting to residential on every infill site that becomes available.

This is a tension that developers and municipalities in the Chicago market are navigating right now. Industrial demand across Chicagoland remains strong, and infill industrial sites with good highway access and existing infrastructure, exactly what many brownfields offer, are increasingly scarce. Understanding how to evaluate those industrial opportunities is a genuine competitive advantage for investors active in this market.

Grant Programs and the Funding Stack

This is where brownfield redevelopment separates from standard acquisitions. State and federal grant programs can meaningfully change project economics. Haydock cited Connecticut’s Department of Economic and Community Development program as a model: assessment grants up to $200,000, remediation grants now capped at $6 million per site, and area revitalization planning grants for municipalities evaluating entire corridors. The program has issued over $200 million across 23 rounds, and according to Haydock, every dollar of state investment has generated over $23 in private capital deployment.

The federal EPA Brownfields Program operates in parallel, providing assessment and cleanup grants to municipalities and councils of government across the country. Illinois has its own brownfield incentive structure as well, and projects in the Chicago metro area have benefited from layering state and federal money against private equity to get deals done that would not otherwise work.

For developers, the practical takeaway is that the funding landscape rewards preparation. Municipalities often serve as the grant applicant and then partner with private developers on the project. Building those municipal relationships early, before a specific site is in play, is how experienced brownfield developers stay ahead of the capital formation curve.

The Off-Market Angle

Brownfield sites rarely surface on LoopNet. They tend to trade off-market, often at a significant discount to replacement cost, precisely because the contamination and complexity scare off buyers who do not know how to underwrite them. That dynamic creates real opportunity for investors willing to do the work. Van Vlissingen and Co. has built its off-market acquisition practice around exactly this kind of situation: sites with real or perceived issues where price reflects perception rather than reality.

The office-to-industrial and office-to-residential conversion work the Van Vlissingen team has been involved in across Chicagoland runs directly parallel to what Haydock describes. Environmental due diligence is a standard part of every conversion underwriting package the team puts together.

Brownfields are not for every investor. They require patience, a sophisticated due diligence team, and a tolerance for complexity that a stabilized core asset does not demand. But for developers and investors who can execute, the combination of below-market land cost, available public subsidy, and strong infill locations makes them among the most compelling opportunities in the current Chicagoland market.

Van Vlissingen and Co.’s brokerage team works with investors and developers across the Greater Chicago and Midwest markets to identify and source industrial and commercial redevelopment sites, including brownfield and value-add properties with significant upside. If you are evaluating a redevelopment opportunity or looking for your next site, contact the Van Vlissingen team at vvco.com or call 847-846-6902.