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Commercial foreclosure postings up

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Foreclosure Listing Service, Inc., which has been monitoring foreclosure posting activity more than four decades, released the findings of its recent study of foreclosure postings filed on commercial real estate located in the Dallas/Fort Worth Metro for the First-Half of 2010 (January – June). 

Since the filing deadline has already passed for filing postings for the upcoming foreclosure auctions in June, FLS is able to analyze and release commercial posting activity for the first six foreclosure auctions of this year.

Mr. George Roddy, Sr., President of Foreclosure Listing Service, Inc., announced, “For the first-half of this year, foreclosure postings filed on D/FW commercial real estate were up 58% compared to one year earlier.  From January through the upcoming foreclosure auctions in June, 1,659 postings have been filed on commercial properties in the Metro compared to just 1,050 for this same six-month period last year.”

He remarked, “But still, this is nothing compared to the crisis in the late 1980’s when around 8,000 commercial postings were filed in one year.”

These foreclosure postings included all types of commercial real estate: such as, retail centers, retail buildings, office buildings, industrial buildings, apartment complexes, unimproved commercial land, and miscellaneous commercial buildings.

Mr. Roddy remarked, “Certainly, there have been many more postings of homes than of commercial properties. 31,852 postings have been filed on homes during the first-half of this year compared to just 1,659 notices against commercial properties.”

The foreclosure researcher continued, “In the D/FW Metro, posting activity has climbed at a much steeper pace on commercial properties than on residential.  Foreclosure notices filed on commercial real estate jumped 58% over the past year compared to only a 10% gain on the residential side of the market.”

Mr. Roddy said, “The top three hardest hit commercial property types, in terms of percentage gain, were miscellaneous commercial buildings, land, and apartments.  Postings of miscellaneous commercial buildings soared 139%; postings filed on tracts of land jumped 73%; and, postings of apartment communities climbed 46%.”

The foreclosure analyst reflected, “The fact that miscellaneous commercial buildings led the pack in foreclosure posting gains over the past year points to one of the most significant differences between today’s foreclosure market versus back in the real estate crash of the late 1980’s.  The difference is the quality or lack of quality in this case, of properties being posted.  In the late 1980’s, I saw a significant amount of signature, Class A properties posted for foreclosure.  Although I am seeing a few Class A properties posted, the vast majority of the commercial properties posted for foreclosure in today’s market are either Class C properties or miscellaneous commercial buildings.”

COMMERCIAL POSTINGS BY PROPERTY TYPE:
 
Mr. Roddy announced, “In the overall Dallas/Fort Worth Metro area, foreclosure posting activity has increased over the past year in all but one of the commercial property types, with the largest gains found among miscellaneous commercial buildings, tracts of land, and apartment communities.  In each of these three categories, there was a 46% or greater increase in posting activity comparing the first six foreclosure auctions of 2010 to 2009.”

MISCELLEANOUS COMMERCIAL BUILDINGS

Mr. Roddy stated, “The largest gain in D/FW commercial posting activity was found among the miscellaneous commercial buildings.  With a 126% surge, postings of the miscellaneous commercial buildings escalated from just 302 for the first-half of 2009 climbing up to 683 by mid-year of 2010.”

Mr. Roddy continued, “I am not surprised by this surge.  Many of these miscellaneous buildings are owner-occupied or single-tenant users, who were on commercial real estate’s front line during this economic crisis.  So many ‘Mom and Pop’ businesses have been forced to close during this struggle.  Simply put, closures mean no rent collected; and, no rental income leads an inability to pay debt service (the building’s mortgage).”

In addition to ranking first in percentage gains in commercial postings, miscellaneous commercial buildings comprised the largest share of the commercial postings filed by representing 41% of the total commercial foreclosure postings recorded so far this year.

Included within this property category are all miscellaneous commercial buildings: such as, convenience centers, car washes, restaurants, hotels/motels, day care centers, auto repair centers, auto dealerships, duplexes, funeral homes, recreational facilities, etc.

COMMERCIAL LAND

Mr. Roddy said, “The second highest gain in posting activity among the commercial property types was a 72% jump in postings filed on tracts of unimproved land.  By the middle of 2009, just 222 postings had been filed on commercial tracts of land; however, for the first six auctions of this year, 381 postings have been filed threatening tracts of land with foreclosure.”

The foreclosure analyst commented, “Land speculators and developers were the second tier of commercial properties to feel the pain of this economic crisis, right behind the miscellaneous buildings.  As signs of this crisis appeared, money for development dried up or became too costly.  As a result, many land developers and speculators were left in a lurch with debt service eating away at their pocketbooks.  For most, there is a limit to how long they can hold on and many have reached or passed that point.”

Postings of commercial land represented 23% of the total commercial foreclosure posting activity so far in 2010.  This was the second highest share of commercial posting activity, following behind postings of miscellaneous commercial buildings.

APARTMENTS

Mr. Roddy stated, “Ranking third highest in posting gain among commercial property types was the 46% jump in postings filed on apartment communities.  From January through the upcoming auctions in June, 234 notices were filed against apartment communities in the Metro compared to 160 notices for this same period one year earlier.”

“The majority of apartment complexes posted for foreclosure this year have been Class C properties, not the Class A signature projects,” Mr. Roddy revealed.

Foreclosure postings filed on apartment complexes equaled 14% of the Metro’s total commercial posting activity so far this year.

OFFICE BUILDINGS

Mr. Roddy commented, “Foreclosure postings filed of D/FW office buildings increased by 18% with 132 postings filed for auctions held during the first-half of this year compared to 112 notices filed for this same six-month period in 2009.”

Foreclosure notices filed on office buildings comprised just 8% of the total commercial postings filed year-to-date.

INDUSTRIAL BUILDINGS

Mr. Roddy said, “Foreclosure postings filed on D/FW industrial buildings inched upward just 1% over the past year.  For the first six auctions of this year, 91 postings have been recorded involving industrial buildings compared to 90 for this same period last year.”

Included within this property category are warehouses, office warehouses, office showrooms, general industrial buildings and manufacturing buildings.  Mini-warehouses are not included in this property classification.

Postings of industrial buildings equated to only 5% of the total commercial posting activity so far this year, which was the lowest market share among the commercial property types.

RETAIL BUILDINGS/CENTERS

Mr. Roddy commented, “The retail centers/buildings category was the only D/FW commercial property type to experience a slowdown in foreclosure postings over the past year.  Down -16%, postings of retail centers/buildings fell from 164 for the first-half of 2009 dropping down
to 138 so far in 2010.”

Notices filed on retail building/centers comprised just 8% of the total commercial postings filed so far this year.

Mr. Roddy said, “For the first-half of the year, postings of commercial real estate skyrocketed in Tarrant County with a 98% jump.  Over the past year, foreclosure notices filed on Tarrant commercial properties climbed from 322 notices for the first six auctions of 2009 rising up to 638 for the first-half of 2010.   Leading the push in Tarrant County was a 299% surge in postings of miscellaneous commercial buildings.  So far this year, 407 postings have been filed on miscellaneous commercial buildings in Tarrant County compared to only 102 by the middle of 2009.”

He added, “In Tarrant County, postings of apartment communities increased 25% and land rose 37%.”

Mr. Roddy continued, “Of the six commercial property types, 3 of the categories in Tarrant County experienced a decline in mid-year posting levels.  Postings of office buildings dropped -24%,  retail centers/buildings declined -23%, and industrial buildings were off -10%.  So, one-half of the commercial property types in Tarrant County had an improvement in foreclosure posting conditions for the first-half of this year.”

Mr. Roddy noted, “Among the other three counties in the Metro – Dallas, Collin, and Denton, commercial posting activity has increased from 32% up to 66%.”

DENTON COUNTY SAW LOWEST INCREASE

“In Denton County,” Mr. Roddy revealed, “commercial foreclosure postings have risen 32%, which was the lowest increase among the four counties in the Metroplex.  Two property types experienced a gain of 200% or more.  The largest gain was a 233% jump in postings of industrial buildings, although the volume of postings was small with only 10 postings filed against industrial buildings in the first-half of 2010 compared to just 3 by the middle of 2009.  Ranking second in posting gains in Denton County, office building postings rose 217% with 19 postings filed so far this year compared to only 6 by this time last year.”

Other property types in Denton County reporting a gain in commercial posting activity included, miscellaneous commercial buildings up 64% and land up 41%.

Mr. Roddy commented, “Two categories reported an improvement in foreclosure postings in Denton County, including a -55% drop in postings filed on apartment communities and a -42% decline in postings of retail centers/buildings.”

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