Monday, October 01, 2012

Fewer Commercial Properties Winding Up On Courthouse Steps

Valley View Mall, KPMG Centre tower, Turtle Creek Village — there have been some big commercial property foreclosures in the Dallas area this year. Most of these deals were financed at the top of the market, before the financial collapse in late 2008. In some cases, the owners paid too much or had financing for the buildings that couldn’t be extended or renewed.
In early 2010, commercial property foreclosure postings in the Dallas-Fort Worth area were running over 300 filings a month. And it wasn’t uncommon for there to be properties with more than $1 billion in loan value up for sale. In recent months the problem loan volume has run at almost half that rate.
After peaking at 3,300 commercial foreclosure postings in 2010, this year the number is likely to be considerably less than 2,000. To put things in perspective, in the worst of the 1980s and early 1990s real estate crash, commercial foreclosure postings in North Texas were running more than 8,000 filings a year.
Joe McBride, a research analyst with Trepp LLC, a New York company that tracks commercial property debt, said the mortgage market appears to be turning the corner. Trepp estimated that in August 2010 there were 181 delinquent mortgage-backed commercial property loans in the Dallas area. Last month the bad loan list was down to 111 properties — and some of those have already been foreclosed on or are controlled by lenders.
Despite some high-profile North Texas foreclosures, the property market downturn this time hasn’t come close to the severity of past crashes. Still, some areas have been hard hit. Downtown Dallas’ office market has suffered the biggest share of foreclosures so far. Along with the KPMG Centre, Comerica Bank Tower, Patriot Tower, 2100 Ross Avenue and Elm Place were taken over by lenders.
But compared with the huge property fallout in other major markets around the country, Dallas and other Texas cities have gotten through the recession without a flood of commercial foreclosures.

Steve Brown
Real Estate Editor
Dallas Morning News