Lisa Simpson
Jul 21,2010
In: Foreclosure

Commercial Properties Cowering Under the Threat of Foreclosures

Commercial properties are cowering under the threat of foreclosures.

In the Twin Cities commercial properties are cowering under the threat of foreclosures. Some pundits opine that there will be further downsizing of firms, increase of vacancies and defaults in short term loans.

There is a surge in foreclosures of office property, shops, apartments and other commercial units in the counties of Hennepin and Ramsey. It is a sure sign that the weak economy is continuing to gnaw into the entrails of recovery of the real estate market.

During the first half of the year the foreclosure of commercial properties continues to be much less than that of residential ones. It was 3% and 3.7% in Hennepin and Ramsey Counties respectively. But it is an increase of 2% from 2008 in both the counties. But it is not just figures of individual properties that give the true picture – one commercial foreclosure can have a rippling effect far more dangerous than that of a home foreclosure.

The taxpayer services office of Hennepin County reported 81 commercial foreclosures including apartment buildings during the first 6 months of 2009. It is most probably going to be more than the previous years total counting to 138. In Ramsey County there were 62 commercial foreclosures in the previous year. This year already the number has touched 45.

The figures are entirely accurate – reality may be much worse. Many defaulting borrowers return the property to the lenders and thus avoid foreclosure. Jeffrey Larson of JBL Companies based in Eagan deals with troubled commercial estates said that at present he is dealing with 48 units in his area that are under receivership. One year ago the number of clients was 12.

Experts have been predicting a wave of commercial foreclosures to follow the first one of residential units. According to Realpoint Research of Pennsylvania there has been six times increase in the delinquency figures of commercial mortgaged properties across the nation. The properties include hotels, retail units, offices and properties mortgaged for industrial purposes.

Local analysts of real estate are optimistic that the Twin Cities will be spared this surge of commercial foreclosures that are happening in other parts of the country that had seen a frenzy of speculation – California, Texas and Florida.

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