Commercial foreclosures are skyrocketing
Commercial foreclosures are skyrocketing and what is being seen is only the tip of the iceberg in the valley. In Maricopa County over 2,000 commercial properties received foreclosure notices since the beginning of this year. The loans are worth $6.3 billion. In contrast with the usual numbers this number is causing intense worry. In the past decade there have been practically no commercial foreclosures.
The problem has started with the decline in the real estate market and lack of refinancing alternatives. This has caused those who have taken loans on commercial properties to default. Due to lack of jobs industrial and ware house estates are fast slipping into foreclosures. During the second quarter of 2009 over 1 million sq ft of industrial and ware house space that had previously been occupied is now lying vacant.
Bret Isbel, a broker dealing with commercial real estate has been keeping count of the sales in the county. The issue of a sale notice can take many months. The notice numbers have been steady hovering from 300 to 400 since the beginning of this year. But the foreclosure process to be completed takes a lot of time.
In Arizona the lender has two options while dealing with a defaulting borrower. There is the foreclosure court process or the trustee sale method. The latter is faster and less costly but the lender has to forego certain legal rights. Isbel said that there are no signs of the foreclosures tapering off – rather it is picking up speed. He opined, “We’re at the tip of the iceberg, there’s no doubt. It’s just a question of how big it is underneath.”
The prime problem for those who develop commercial properties is that they have to be consistent in their loan payments whether they get proper rent or not. During these recession days it is proving to be difficult to find renters who pay high rent. Each day the demand for commercial space is dropping with business climate getting darker.
The federal government has come forward to help residential foreclosure victims by allowing for workouts with lenders. But no scheme has yet been started to help those facing commercial foreclosures; neither is there any talk going on about it in the near future.
Generally the lenders in the commercial sector are not modifying loans. Meanwhile the rental rates of commercial properties have fallen by as much as 75% in some of the regions. In June there were 50 commercial foreclosures in Maricopa County with the value of the property involved being $54 million.
- Home Appraisal Codes Being Revamped so as to Avoid Rerun of Foreclosure Crisis
- Foreclosure Crisis Led to Recession Bringing Changes in American Capitalism
- Lack of Education has Been to a Large Extent Behind the Foreclosure Crisis
- The Impact of the Foreclosure Crisis will be Felt for Many Years to Come
- Foreclosure Crisis Imposes on the Dreams and Nightmares of Americans
- The regulators as well as the executives are equally to blame for bank failures linked to the foreclosure crisis
