According to an article in the Dallas Morning News, one of downtown Dallas’ largest office skyscrapers is facing foreclosure .
The article said:
The 52-story Elm Place tower at 1401 Elm St. has been posted for forced sale by lenders who are owed more than $22 million for the office tower and other downtown properties.
As we have noted on previous posts, the commercial real estate markets are over-leveraged and overdeveloped. There are simply too many commercial properties with too few tenants and too much debt which a recipe for massive foreclosures in the commercial real state market. This skyscraper is a perfect example of what we may see in the future with other properties. It has 1.3 million square feet of space but has sat largely empty with its biggest tenant the troubled Bank of America now moving and pushing the property towards foreclosure.
Massive foreclosures in the commercial real estate sector won’t be an isolated event. Many banks have investments in commercial real estate and massive foreclosures could send many banks to bankruptcy. We would also see a massive number of job losses if the number of commercial real estate foreclosures rises to the level currently being experienced in the residential sector.