A conversation between Gordon Lamphere, J.D. of Van Vlissingen and Co. and Sam Haydock, a principal and director of business development and client care for the environmental division at BL Companies, with more than 35 years of experience in environmental and land use consulting. Transcript edited for clarity.
Sam Haydock: Light has a significant impact on quality of life and how people feel about where they live. When you see abandoned properties, empty, dark, smokestacks sitting, all that has a real impact. Good developable land is getting harder and harder to find. A lot of these properties sit on land with good location, good access. A lot of these old towns were built and developed around these industrial and commercial facilities. The neighborhood was created so people could walk to work, and now at the heart of it you have something sitting there, empty, deserted. All those factors play into why redevelopment of brownfields is so important.
Gordon Lamphere: I’m Gordon Lamphere, and welcome to the Real Finds Podcast, where we have real conversations with key entrepreneurs, activists, and researchers shaping the real estate industry and, as a result, our world. On today’s podcast we’ll be speaking with Sam Haydock, a principal and director of business development and client care for the environmental division at BL Companies, with more than thirty-five years of experience in environmental and land use consulting. Sam holds a master’s in geology from the University of Vermont and a bachelor’s in geology from the University of Pennsylvania. He has spent a career guiding developers, municipalities, and institutions through contaminated site remediation and brownfield redevelopments. On the podcast, we take a dive into what brownfields really are, why they matter to communities, and particularly how investors can unlock huge capital potential through some of commercial real estate’s most overlooked opportunities. If you’re interested in brownfield redevelopments, today’s podcast is well worth a listen. Sam, thanks for hopping on today.
Sam Haydock: Glad to be here. Thank you.
Gordon Lamphere: Before we start, tell us a little about what got you into the world of real estate and real estate retrofitting, and understanding green versus brownfield. How’d you get started?
Sam Haydock: Way back in college, when I started I was undeclared in terms of my major. I took a geology class and just loved it, so I ended up a geology major, and went on to get my master’s in geology. When I finished, I was faced with exploring the job market, and there was oil and gas, mining and minerals, getting a PhD and becoming a professor, and this new environmental science field. This was the early to mid-eighties, and the impact of contaminated and polluted properties was beginning to become real in the corporate and real estate community. There was the Fleet Factors case, where Fleet Bank got hit with a huge expense for taking over management of contaminated property. That led to real awareness in the business community that the legacy sites polluted from industrial operations had real financial impact. So I chose the environmental consulting career. I spent the first few years dealing with clean water, water resource development for large water users, but eventually migrated into the world of investigating and remediating contaminated properties. It’s something we do as part of due diligence for deals, but the most exciting part is when we can take a contaminated property and see it all the way through from its current state to a new use, and help make a developer’s vision real, turn it into something productive and exciting that people use, that generates taxes, all those things.
Gordon Lamphere: We hear the word brownfield thrown around a lot in the commercial real estate industry, but what exactly qualifies as a brownfield site?
Sam Haydock: There are a couple of key components to the definition, and they’re important, particularly when it comes to trying to get state or federal money to clean them up. The first is that you have real estate that is either abandoned or underutilized. Abandoned is pretty simple; underutilized has some nuance in terms of what constitutes it, if you have a property that has a rent roll and generates some taxes. It depends on a lot of site-specific factors. You also hear the term highest and best use thrown around in that discussion. The second major component is contamination. Is it there? Are there environmental issues? So the concept of real or perceived environmental contamination that is an impediment to reuse and redevelopment. Real is obvious; we have a lot of sites with significant issues that represent a real threat to human health and the environment. Then you have properties where people think it’s got to be a disaster because of how it was used in the past and what they left behind, and a lot of times we test these sites and they turn out remarkably clean. But that perceived issue plays into it, and it’s a big part of why properties sit abandoned or underutilized.
Gordon Lamphere: When we see a property that might be abandoned or underutilized in our community, driving around a market like Chicago or the Northeast, why are these properties important in the first place? Why does it matter?
Sam Haydock: A number of factors play into it. First, abandoned properties don’t generate taxes and they don’t put people to work, so from the standpoint of municipal and state economics, having previously developed properties sitting idle doesn’t make sense. There’s the impact on communities. Light has a significant impact on quality of life and how people feel about where they live. When you see abandoned properties, empty, dark, scary-looking old industrial facilities, or just a lot of junk left on a site, drums in the back, weeds, the lawns overgrown, all that has a real impact on how people feel about their neighborhood. Also, good developable land is getting harder and harder to find. A lot of these properties sit on land with good location and access, maybe good access for transportation or truck routes. A lot of these old towns were built and developed around these industrial and commercial facilities. The neighborhood was created so people could walk to work, and now at the heart of it you have something sitting there, empty and deserted. All those factors play into why redevelopment of brownfields is so important. You can ask almost anybody who has lived in some of these older industrial communities, and they always have a story about something abandoned or derelict having an impact on where they live.
Gordon Lamphere: In the Rust Belt, this is not the most uncommon conversation we have, but one of the things that’s important is actually applying it in practice. So how does the due diligence process start for a brownfield development when an investor is starting to evaluate a property?
Sam Haydock: It is multifactorial. It starts first and foremost with an idea or a vision. Developers do what they do; they look for opportunity and potential in the market, and they’re risk-takers, but they’re also looking for a return on investment. If they see a potential opportunity to create a project that will create a return on investment and also just be a great project, a lot of these guys love to build stuff. Once you get the idea, you have to look for properties, and properties need to fit a certain model for what you’re trying to build. You need to have the market. Then you really begin digging in, rolling up your sleeves, looking at all the various factors. Environmental plays a big part: soil and groundwater contamination, pollution created from old uses where laws weren’t as stringent or just weren’t complied with. Those can bring a huge expense to redeveloping property. It’s not just soil and groundwater; you have hazardous building materials, asbestos, lead. PCBs are a big one that has really come to light over the last fifteen years or longer, where the presence of PCBs in building materials has had a huge impact on potential cost. Indoor air quality too. These are all things evaluated during environmental due diligence.
Then there are other aspects of due diligence, the physical context of your site. Will it support what you’re hoping to build? Is there enough acreage? Is there transportation? Are the slopes too steep? Do you have the infrastructure, water, sewer, electric, gas? If you’re going to repurpose an existing building, you need to spend a lot of time looking at it. How was it built? Is it structurally sound? Are the columns and support beams spaced in a way that allows for successful redevelopment for a given use, whether industrial, commercial, or conversion to apartments? Ceiling height is very important if you’re trying to convert an old industrial building into a warehouse use today. Then all the elements around the interior with respect to code compatibility, ADA compliance, egress, ingress, and the MEP issues, fire protection, all the life safety issues required for a building today. That can be a huge expense. Lastly, your zoning and municipal framework, what’s the process to get entitlements. And two more: market, is there demand for what you’re hoping to do, whether apartments or commercial industrial. And public support, particularly if state or federal money is going to be involved; there needs to be a public engagement component. If the neighborhood is adamantly against your proposed use, that creates an uphill battle. All those elements factor into the due diligence process.
Gordon Lamphere: Let’s talk about how this gets applied. We’ve certainly seen industrial updates and conversions to modern industrial, but the most promising projects we’ve seen have generally been either office-to-industrial conversions or industrial-to-multifamily conversions. Let’s start with industrial to multifamily. We’re in a housing supply shortage in a lot of traditionally built-up places, like the Northeast, parts of LA. How are you seeing that play out in Connecticut in particular, and how effective has it been at bringing product to market?
Sam Haydock: Really good point. There’s absolutely a ton of discussion in Connecticut and nationally about housing supply, demand, and affordability. Connecticut over the last couple of years has come up with a number that we need somewhere around a hundred thousand new units of housing to meet current demand. I don’t know that I fully understand exactly where that number comes from; I don’t think there are a hundred thousand people lining up at the border waiting to move to Connecticut. But we have a lot of old housing stock, a lot of stuff run down over the years that just doesn’t meet expectations for how people expect to live today. So industrial-to-residential conversion is happening. We have a lot of old mill buildings in and around the various towns in Connecticut, some of them beautiful, and when properly restored they create wonderful apartments and lofts, oftentimes in nice rural settings. There’s a fair amount of that going on.
I think there’s more buzz right now around office to residential, driven again by the need for housing and the numbers out there, but also by the rather unfortunate plight of office right now. We have a lot of vacant office space sitting in our cities and towns in Connecticut, so there’s a lot of discussion and a lot of applications to convert office to housing. It’s harder, though, from the standpoint of making it happen. Some of these office buildings are very difficult to convert; there’s just a tremendous amount of work needed. Think about a large office tower with a large floor plate, fifteen stories, and each floor might be plumbed for one bathroom, a men’s room and a ladies’ room. If you want to convert that floor into eight or ten apartments, there’s a tremendous amount of work to make that happen and get it to work properly. But there is a tremendous push to make it happen.
The plumbing, floor-plate, and light-and-air challenges Sam raises are exactly what Eugene Flotteron detailed from the architecture side in Pulling Off the Largest Office-to-Residential Conversion in History.
We have a very robust brownfields redevelopment incentive program in Connecticut. We have a new program called Grayfields, focused on those underutilized properties that may not have as much contamination. They may still have hazardous building materials depending on age, lead, asbestos, PCBs, but these are properties that typically weren’t industrial to begin with. Soil and groundwater issues may not be as big a factor, but the process of converting to residential is still a challenge, so the state embarked on this Grayfields program to help incentivize and provide funding. One of the other huge factors making office to residential more appealing is that the decline of office, and the reassessment of office property values, is hitting municipal bottom lines really hard. So there’s a strong move to get these properties back into productive use and hopefully generate some of the tax revenue these municipalities have come to count on.
That reassessment-driven pressure on municipal budgets is the same doom-loop dynamic reshaping downtowns everywhere, and it runs through our broader look at supply in Can We Solve the Housing Crisis Without New Construction?
Gordon Lamphere: Let’s say I’ve got an office property sitting, from the 1970s or 60s, on a parcel of land, and I’m looking at redeveloping it. What are some of the big things I should watch out for from the environmental process when evaluating that building?
Sam Haydock: If you’re looking at something built in the sixties or seventies, the asbestos, lead, and PCB issues would be very real, most likely. Most of those products weren’t banned until the late seventies, and in some cases not phased out until the early eighties. We’re pretty good, and most developers understand asbestos and asbestos abatement; that’s pretty standard stuff they’ve dealt with for years. Granted, some buildings are better or worse than others. We had a really cool old office building in New Haven, I think owned by Pirelli Tire, a unique design, and it sat vacant for decades. The big reason was the cost of asbestos abatement. That building was built in a way that made it really expensive to deal with all the asbestos, probably a lot of spray-on fireproofing and materials that all had to be properly removed and disposed of. Most asbestos waste today goes to Ohio, so you not only need specialized workers, containment, licenses, and steps to make sure abating it doesn’t create a risk to workers or anybody around the work area, but then you have to haul it out to Ohio or other places where they dispose of it. The costs are real.
The big one causing a lot of issues is PCBs. In the fifties and sixties, PCBs were added to a lot of building products, particularly caulking materials and paints. For caulk it helped keep it pliable, and for paints it had different purposes depending on the building. These materials are very expensive to remove and dispose of. In some cases it’s straightforward, but one thing about PCBs is they leach. They’ll leach out of the caulk or migrate out of the paint and contaminate other materials. With caulking, the PCBs leach into the substrate. You have a window, caulking placed between the window and the concrete or brick substrate, and the PCBs leach into the brick or concrete. In some cases that contamination requires extensive additional abatement, in some cases removing several courses of brick to get to where the leaching stopped. If it’s concrete, it can be even more costly and disruptive. It’s a huge issue in a lot of schools built in the fifties and sixties, and of course these are buildings where we’re putting our children all day. The PCBs can give off vapor, contaminate other materials, get caught up in the dust, get entrained and trapped in the HVAC system. Lead is still a concern too; older buildings have lead paint. But in most cases it’s the PCBs or the asbestos that can be the real deal breakers.
Gordon Lamphere: One important thing from our perspective, as somebody who does a bunch of conversion deals every year, is that the year of the building doesn’t necessarily mean you’re in the clear. We almost took on a project built in the 1980s, and it turned out the developer had a lot of tile lying around from the seventies and decided to keep using asbestos tile into the eighties, and we were like, this is wild. So in terms of wild things, there have been folks very effective at applying a lot of what we’ve talked about in Illinois, and I’ve seen that over and over, in our portfolio and with the people we work with. Broadly, are brownfield policies generally working in places like Connecticut and Illinois and across the United States, or are they still too cumbersome for most projects?
Sam Haydock: There are two elements. One is the economic incentive, the economic development piece. Speaking for Connecticut, the state has done a great job providing funding and grants through the municipalities to help investigate and remediate brownfield sites. Today actually is the deadline for round twenty-three of the Department of Economic and Community Development Brownfield Assessment and Remediation Grants. There are several types. The straightforward assessment grants, for investigating to determine if soil and groundwater are contaminated or if hazardous building materials are present at quantities that are a significant impediment and what that cost might be, those are two-hundred-thousand-dollar grants that go to the municipality; they can engage directly or work in partnership with a developer. There are remediation grants, originally capped at two million dollars but now raised to six million for remediation of soil, groundwater, and hazardous building materials. And there’s a brownfield area revitalization, or BAR, planning grant, also two-hundred-thousand-dollar grants, where a municipality can look at a corridor and evaluate their priority brownfield locations, maybe a section of Main Street or downtown, identify a priority list, do some phase ones and phase twos, and engage planners to evaluate the vision for that area. Those typically involve a market analysis of what could drive a potential revitalization, whether housing, a small incubator space, or maybe a larger industrial use.
Those are the three types of grants DECD in Connecticut has been using, and we’re at round twenty-three. Between rounds one and twenty-three, the state has issued well over two hundred million dollars in grants to promote revitalization and redevelopment of brownfields. At latest count, every dollar the state has spent has led to over twenty-three dollars of private investment in return. To me, that is a huge success. The federal government is also in on the game; there are lots of assessment grants available to municipalities, and in states that have counties, to counties, and we have a lot of councils of government, the COGs, in Connecticut, like the Greater Hartford Council of Governments and the South Central Connecticut Council of Governments, which are also eligible for planning grants. Both state and federal government recognize that these properties are going to sit idle unless there’s a way to incentivize redevelopment and help make the pro forma work. Developers are looking for a return on investment, so if the project won’t pencil out and the primary reason is the brownfield issues, they walk away. Connecticut has done an extremely good job with this program; it’s a real success story.
Gordon Lamphere: One of the big success stories we have on the podcast is our Final Four questions, and I’d love to dive into them. One of my favorites, which we love asking men and women in the arena who are absolute experts, is: what’s one topic the commercial real estate industry isn’t talking enough about? I know many brokers, developers, and investors really don’t understand brownfields very well, so what’s one topic related to that we’re not talking about enough?
Sam Haydock: First I’d say, if you’re a developer and you don’t understand brownfields at this point, that would be surprising to me. There are still people who buy properties without doing due diligence; maybe they’re cash buyers, maybe they think they understand the risk, and it depends on what they’re trying to do. But a real brownfield, a site with a lot of issues, you need to be aware that is a major impediment to a successful project. The answer to that question changes with the times. Right now, I feel like we are focused too much on getting these properties redeveloped into residential use. I understand the reason for it, we touched on some of that. But one of the concepts of brownfield redevelopment is urban revitalization. Before COVID there was a huge push for pedestrian-friendly urban centers where people could live, work, and play. It took a hit with COVID as people stayed home, but we’re getting back to that. One thing that worries me is taking all these old commercial industrial properties and converting them to residential. We need industrial and commercial uses in our communities where we live, work, and play. Industry’s not what it used to be; it’s not belching smokestacks. I can remember driving through the Naugatuck Valley in Connecticut in the seventies, and the stench, the smoke was terrible, and the Naugatuck River was different colors depending on the day, yellow, green. We’ve made huge strides cleaning all that up, and the Naugatuck Valley is a wonderful place to live, work, and play today. But we should be attracting light industry, maybe even heavy industry. There’s a need for more than just warehouse space. We need people who make things and create things, and a lot of these brownfields should be reserved for those places people can maybe even walk to in a live-work-play community. We need to recognize how important that is to our communities.
Gordon Lamphere: I don’t think as many Americans realize how close industry often is to their homes, because this isn’t the 1900s anymore. We were working with a client who was an office user, and they didn’t even realize that two blocks from them was a massive factory, because it doesn’t make a lot of noise or smells, particularly with precision manufacturing these days. It’s just a different world. So in terms of a different world, one of the big things we like to do is look forward. Ten years out, what do you think will change the most about the commercial real estate industry?
Sam Haydock: Ten years out, I think we’re all wondering how AI is going to affect everything, including the real estate industry. I’ve seen lots of webinars and networking events where the topic is evaluating AI’s impact on commercial real estate brokerage. That’s going to be very interesting. I’m not a broker and I don’t buy and sell real estate, but I do think the human touch is critical, so hopefully AI won’t take over. But in terms of how deals get done, how information gets put out there, how buyers and sellers do their research on properties, it will change, no question.
Gordon Lamphere: One of the things that hasn’t changed since we started the podcast is that a huge percentage of our listeners are younger, so we always love to ask: if you could go back to the beginning of your career and give one minute of advice, what would it be?
Sam Haydock: I love my career. It’s challenging, technical, financial, so many different elements. It does every now and then bring in my geology background, so I can touch base with those roots from college days, and it’s exciting to clean up properties and have them back in productive use. It’s a really cool, rewarding career. The only thing I might evaluate differently if I were starting over is that I think I’d stay in the deal, but maybe I’d be a developer.
Gordon Lamphere: It’s always nice to have a little skin in the game when things go right. One of the things that’s really gone right on our podcast is getting to meet a lot of interesting men and women in the arena doing cool things in the real estate world or adjacent to it. So who should be the next person to hop on the podcast?
Sam Haydock: My world is relatively local here, but I could think of a couple of folks. Matt Pugliese is deputy director of the Department of Economic and Community Development. He’s largely responsible for keeping the grant funding flowing and staying in contact with the business community, letting them know what Connecticut has to offer. Matt’s a great guy doing a great job, and he’d be really interesting to speak to from the state’s perspective. There are a couple of developers whose names I continually see out there. One is Adam Winstanley from Winstanley Enterprises; he’s been doing a lot of industrial and commercial, but changes what he’s trying to do based on the market. Another is the folks at Spinnaker down in Norwalk, Clay Fowler, who’s been doing conversions and new builds throughout Connecticut to create some really cool living environments in our urban centers. Those are a few that come to mind.
Gordon Lamphere: I’d love to get some contact information if you have it. To wrap up, if somebody wants to reach out to you, what’s the best way?
Sam Haydock: You can reach me by cell, or my email is shaydock at blcompanies dot com.
Gordon Lamphere: Thank you so much for hopping on today, Sam. We really appreciate it, and we have to have you on in the future.
Sam Haydock: Great, thanks for having me. I’d love to come back.
Gordon Lamphere: Thanks again to Sam. We appreciate his insights. If you enjoyed the podcast, please give us a like, a five-star rating, and a review. Your comments, interactions, and subscriptions truly matter and help us continue to provide quality guests. You can find us on YouTube, Spotify, or wherever you get your podcasts. I’m Gordon Lamphere, the Real Finds Podcast. Thank you for listening.
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