There were 2,431 Dallas-Fort Worth commercial real estate foreclosures in 2009, that’s up from 1,900 commercial foreclosures in 2008.
The biggest rise in commercial foreclosure filings in 2009 was in postings for office – up 121 percent – and retail buildings, up 20 percent. Foreclosure filings for commercial land also increased by 71 percent compared with 2008. Apartments were near the top of the list of commercial building foreclosure postings with more than 400 property filings.
The rise in commercial real estate foreclosures is due to the still stagnant credit markets. While many commercial lenders are slowly climbing out of the red (with the help of the bailout), they are still hesitant to lend to businesses, especially those in markets considered weak-housing and retail especially. Office buildings have been hit incredibly hard as many large companies file bankruptcy, implement job losses and consolidate their office spaces to save money. Many office buildings have a large vacancy rate coupled with a rental market that heavily favors the renter. Many businesses have taken this opportunity to negotiate deep discounts on their leases cutting into the profits of the landlords and making them more vulnerable to foreclosure.
But it’s not just office buildings becoming more vulnerable to foreclosure, many retail spaces are facing a large amount of vacancies because several large box retailers such as Circuit City have filed bankruptcy and gone out of business in 2009. Dependent on the revenue of their largest renters, many retail spaces have succumbed to foreclosure and some analysts predict we may see even more commercial real estate foreclosures in 2010.