"Monster in The Closet"

By LESLIE WHITAKER

Almost immediately after layers of asbestos were discovered between floors and ceilings in Houston's 13-story BancTexas building, worried tenants started packing up and leaving. Now, little more than a year later, the building is empty and its owners are trying to sell it for $6.5 million, an asking price 30% to 50% less than the building might fetch if it were asbestos-free. In Manhattan the former J.C. Penney headquarters, a 45-story tower that was sold last May to a real estate partnership for $352 million, stands vacant while workers remove asbestos from the building. Estimated cost: $6 million.

Asbestos, the cancer-causing mineral that is being scrubbed from thousands of U.S. schools, is causing an epidemic of fear among the owners and tenants of asbestos-ridden office towers, shopping malls, industrial parks and apartment buildings. Even though the substance poses only a minimal health risk in most work environments, its widespread presence in the ceilings and walls of commercial buildings is prompting a sharp drop in the value of those , structures. It is also spurring a crash cleanup effort that may cost as much as $100 billion over the next 25 years. "Asbestos is the monster in the closet," says Richard Jones, a Connecticut attorney who represents mortgage lenders. "People's reaction is visceral. It has a very chilling effect."

Asbestos lurks in some of the most prominent and populated structures: Manhattan's World Trade Center, Chicago's John Hancock Building and Houston's Astrodome. But it can be found at many ordinary addresses as well. More than 733,000 structures, or 20% of U.S. commercial and public properties, are believed to contain the mineral, according to the Environmental Protection Agency. In about two-thirds of buildings with asbestos, some of the material is in a friable state, which means it is crumbling into microscopic fibers that can float through the air. (There has yet been no federal survey of single-family homes, but a preliminary study indicated that houses tend to have relatively low levels of airborne asbestos.)

Once regarded as a magic mineral for its fireproofing and insulating properties, asbestos was severely restricted by the EPA in 1973 after high doses of its fibers were found to scar the lungs, causing cancer and other diseases. But by that time, 30 million tons had been wrapped around heating pipes and furnaces, sprayed onto girders and mixed into tiles at a cost of 25 cents per sq. ft. Now property owners are often spending 100 times that amount to remove it, cover it with a sealant, or enclose it with materials like Sheetrock.

The anxiety surrounding asbestos is based on its deadliness in massive doses, but many researchers contend that low levels of exposure are not necessarily hazardous. Since the mineral occurs naturally, trace amounts can often be found in fresh air and water. Yet the EPA has said that the only guaranteed safe amount of airborne asbestos is zero.

Shrewd investors are picking up asbestos-containing buildings on the cheap. Shuwa Corp., a Japanese real estate firm, bought Arco Plaza in Los Angeles last year for $620 million, a $50 million discount from the original asking price. In return, Shuwa agreed to pay for asbestos removal, which eventually cost an estimated $20 million. But even price cuts will not entice some investors. Many commercial tenants react the same way: IBM, AT&T and Northrup refuse to rent space in buildings where the mineral is present.

A primary reason corporations are so cautious is the fear of lawsuits by tenants and workers. Many cases have been filed by school systems and other building owners seeking to recover cleanup costs from the manufacturers. But a handful of lawsuits have been filed by tenants charging landlords -- and property buyers charging sellers -- with concealing the presence of asbestos. Even owners who have been up-front about the mineral's presence are worried. They fear that future suits will be brought by individuals linking their asbestos-related illnesses, which have a 20-year latency period, to buildings where they lived or worked. "The area is so new that nobody really knows how far the liability will extend," says Daniel Sitomer, a Manhattan asbestos lawyer.

The demand for asbestos-removal service vastly exceeds the ability of the fledgling industry to supply it safely. The industry's rapid growth, from an estimated $200 million in revenues in 1983 to more than $2.7 billion last year, has produced many so-called rip-and-skip artists, who spring up overnight and disappear a few months later. Hundreds of cleanup jobs have been botched by poorly trained and badly equipped workers who send additional asbestos particles swirling through the air.

Cleaning up the asbestos-abatement industry has become a high priority for many state and local governments. Forty states have created training and certification programs for asbestos removal. The EPA is thinking of expanding to commercial and public buildings the Asbestos Hazard Emergency Response Act, which requires all schools to draw up a plan to control or remove asbestos, using workers trained according to federal standards.

In the belief that asbestos-cleanup costs are going to burden them for at least two decades, real estate professionals have begun to lobby the Government for financial assistance. Declares Robert Shreve, president of the Institute of Real Estate Management: "We feel tax credits are in order because ((the asbestos problem)) is not anybody's fault." If Congress agrees, taxpayers may have to help pay yet another multibillion-dollar cleanup bill.

With reporting by Cristina Garcia/Los Angeles and Michael Mason/Atlanta