According to an article in the Dallas Morning News, Dallas-Fort Worth’s commercial real estate industry may face another year of foreclosures as more properties lose value and financing.
The article said:
“The vast majority of buildings bought after 2005 are absolutely not worth the debt,” said Paul Whitman, president of commercial real estate firm Jones Lang LaSalle’s Dallas office. “Don’t be shocked that there will be hundreds of millions of dollars in foreclosures in commercial real estate in 2010.”
Commercial real estate foreclosures have already made its impact on the economy with several developers and investors filing bankruptcy and many properties remaining empty even with their once sought after luxury amenities. The truth is that many commercial properties have been greatly impacted by declining values that fall well below the debt owed on the property. That phenomenon has created a level of commercial real estate foreclosures on the market which has become a bottleneck in the sales pipeline, so that even if a developer or investor wants to sell a property to avoid foreclosure , they can’t do so without offering a price well below the amount of their debt. We can expect to see more of that has the foreclosure crisis continues.