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What Exactly is Meant by "Distressed" Real Estate?
"...It's a truism that in our industry, over 50 percent of our budgets go to restoration. It's probably been that way since the early 1990s, but
no one has formally measured it"...
— Edward Sullivan, Editor of Building & Operations Management magazine
Distressed real estate takes on many forms, which may include
under-capitalized ownership interests, absenteeism, low occupancy, and
other human/social factors that generally contributes to blighted
communities. Alternatively, a more tangible form of distress is related
to the health and well-being of the infrastructure itself (structural
instability, presence of asbestos, lead-based paint, mold and other
toxins). Other properties may be distressed due to lack of available
water resources, the presence of geologic hazards such as seismic zones,
ground instability/movement, floodplain issues, etc.
In nearly all instances, a clever, well-coordinated team can create a
workable solution if the site itself has intrinsic real estate value
(location, growth, sustainable economy, demand) and if the financial
components of the project are feasible.
The last type of distressed real estate are "Brownfields". These are
properties where soil and groundwater have been impaired from previous
land uses. Many times, brownfields also have other types of stressors
(finance, hazard, infrastructural). Some interesting metrics and
attributes are listed below:
- 450,000 Brownfields sites in the United States (EPA)
- Approximately 9,000 Sites in the SF Bay Area & nearly 6,000 in San Diego
Counties alone (SF Chronicle).
- Conservatively estimated to be a $225B market nationwide, $10B in California
(EPA)
- California population growth nearly double the national average over the
past 10 years (state website)
- U.S. Immigration rate 3.8 percent per year (2000 census).
- California — 220,000 housing units/year projected through 2020. Currently
building less than 170,000 new units.
- Gap = 50,000 units/year (SF Chronicle) Global Restoration Economy is $1Trillion
per annum (Cunningham, S., The
Restoration Economy, The Greatest Growth Frontier, 2002)
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Contact Elevation77 to discuss your project, your community, or investment opportunities with Elevation77 initiatives. 
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