Wednesday, July 06, 2005

Downtown Dallas & Uptown Real Estate News

Downtown Dallas & Uptown Real Estate News

Commercial market takes a different path

DALLAS (DallasNews.com) - By now you've probably heard that when it comes to home foreclosures, we're No. 1.

It's not something the chamber of commerce will be putting on signs at the airport.

But the Dallas-Fort Worth area is also attracting national attention because of its home loan default rate – and not for the first time, either.

Back in the bad old days of the late 1980s, the home foreclosure rate was even worse.

What's interesting this go-round is that the housing market is taking hits on the courthouse steps while commercial real estate zips right along.

During the first six months of 2005, only about 543 commercial buildings were posted for foreclosure, a decline of 19 percent from the same time last year.

At the same time, lenders have posted almost 17,000 D-FW area homes, an increase of 8 percent.

Prices for commercial real estate, including office buildings, shopping centers, warehouses and apartments, are soaring. And the number of investors with cash in hand to buy these properties seems endless.

George Roddy of Foreclosure Listing Service Inc. estimates that about 60 percent of the homes posted each month are actually foreclosed on while fewer than 25 percent of the commercial properties are sold at auction.

In some cases, investors buy the properties before they get to the auction, he said. "There are so many people interested in buying foreclosed commercial properties that they are waiting in line."

Mr. Roddy says he's surprised at the low number of commercial foreclosures.

"Every month I'm expecting the worst, and we never see it," he said. "Of course, we haven't seen the same kind of funny-money loans that were made in the 1980s.

"The lenders and investors were more savvy this time, and there is more equity in the deals," Mr. Roddy said.

Most of the commercial real estate deals that have gone bust have been smaller, older properties. And now that the prospect of a jump in mortgage rates this year is fading, there's less likelihood that more commercial buildings will wind up in the tank.

Distribution center

A Los Angeles-based industrial developer is lining up two major projects north of Dallas/Fort Worth International Airport.

Majestic Realty Co. plans to develop a two-building, 300,000-square-foot speculative distribution center on Belt Line Road in Coppell.

"We are going to build both of them at the same time," said Al Sorrels, Majestic's local vice president and director of development. "We think there is a lot of opportunity in that market north of D/FW Airport.

Majestic is building the Coppell project in partnership with Northwest Mutual Insurance Co. The buildings should be finished in early 2006.

Before then, Majestic hopes to start work on an even bigger project in Lewisville.

The developer has purchased a 170-acre site for a business park on State Highway 121 at Edmonds Lane.

"We have that site master-planned for just under 3 million square feet," Mr. Sorrels said. He said the company plans to start work there within the next 180 days.

Majestic has been in the North Texas market since 2000, when it built a million-square-foot warehouse for Mattel Inc. in North Fort Worth. The company also has a 300,000-square-foot industrial project in Plano.

"We'll be looking for more opportunities throughout the metroplex," Mr. Sorrels said. "We will be trying to do some things in Houston as well."

Lender to be acquired

Longtime Dallas-based lender Malone Mortgage Co. is being acquired by KeyCorp of Cleveland.

Malone Mortgage makes and services apartment loans nationwide. The company does about $200 million in loans each year and services a loan portfolio of almost $1.2 billion.

"We are looking forward to the endless capabilities this acquisition will offer our clients," Malone Mortgage founder Bernard "Bud" P. Malone said in a statement. "Our employees will benefit as well, since they will be joining one of the premier real estate capital providers in the country."

Terms of the transaction were not disclosed.

KeyCorp is one of the nation's largest commercial real estate capital providers, with about $19 billion in annual financings.

Fairmont renovations

The Fairmont Dallas has completed its $4.5 million redo, hotel officials said this week.

The most noticeable change was that the two room towers were painted brown – they had been white since the hotel opened in 1969.

The only thing left to finish is tinting the windows, which is scheduled for early next year, Fairmont general manager Frank Naboulsi said.

"We believe this new look will help the hotel continue its contributions to the revitalization of downtown and to the exciting developments taking place in and around the Arts District," he said.

COMMERCIAL FORECLOSURES

During the first half of the year, North Texas commercial foreclosures fell 19 percent. The number of commercial properties posted for foreclosure in Dallas, Tarrant, Collin and Denton counties:

YEAR # of Foreclosures
1999 731
2000 660
2001 779
2002 880
2003 1,039
2004 1,265
2005 543*

*First six months

SOURCE: Foreclosure Listing Service