Written by Mike Donnelly, March 18, 2012 The Washington Post Capitol Business
The amount of commercial real estate backed by troubled loans in the United States continues to fall from a high of $191.5 billion set in March 2010.
So-called distressed real estate, which included properties in default or foreclosure and real estate taken over by lenders, totaled $166.9 billion in January 2012, down $4.7 billion since October 2011, according to data from Real Capital Analytics.
The steady decline might be because lenders are extending debt obligations, and commercial property values are stabilizing. And with property values rising in select areas, some deals are no longer worth less than their loans.
We think the property loan picture will continue to improve in a meaningful way throughout 2012 and beyond if interest rates remain low and the economic expansion picks up pace. The real test of the decline in the level of distressed assets will come in 2012 and 2013, with about $300 billion in loans coming due each year.
Nationally, the office sector represents the largest share of distressed commercial real estate at $41 billion. This is a decrease of $829 million, or 2 percent, since October 2011. Apartment properties continue to have the second-highest level of distress, with $35.2 billion of distress — a $0.3 billion, or 0.9 percent, drop since October. Unbuilt land and other properties constitute the third-highest level of distress with $29.5 billion in distressed assets, a decline of $300 million. Retail has the fourth-most distressed assets at $27.9 billion, down from $28.6 billion in October. Hotels have the fifth-highest level of distressed assets currently, falling $3.1 billion since October, to $21.1 billion. Although industrial has by far the lowest volume of distressed real estate, it rose $435 million to $12 billion, an increase of 3.8 percent.
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To view this weeks Featured Property click HERE.Matthew Shirley joined Saurage Rotenberg Commercial Real Estate in January 2011. Matthew is a graduate of Louisiana State University with a degree in International Trade and Finance. While at LSU Matthew was a member of Omicron Delta Epsilon The International Honor Society for Economics. Matthew’s professional memberships include the Greater Baton Rouge Association of REALTORS® Commercial Investment Division and the Louisiana Commercial Data Base (LACDB).
Saurage Rotenberg Commercial Real Estate is a member of the Baton Rouge Area Chamber of Commerce (BRAC); the West Baton Rouge Chamber of Commerce; the Baton Rouge Growth Coalition; the Baton Rouge Better Business Bureau; the Louisiana Commercial Data Base (LACDB); and the International Council of Shopping Centers (ICSC). Several agents, on an individual basis, are members of the Society of Industrial and Office Realtors® (SIOR), the Certified Commercial Investment Member Institute (CCIM); the National Association of REALTORS® (NAR); and the Greater Baton Rouge Association of REALTORS® Commercial Investment Division (CID).