Foreclosure Wave Expected to Hit Commercial Property

The foreclosure crisis has devastated the residential real estate market and experts are predicting that the commercial property market is next. Commercial property foreclosures across the country are expected to hit record levels in 2009.

Analysts cite a combination of an unprecedented number of commercial real estate sales in 2004, 2005, and 2006 and lenient lending guidelines as the primary driving force for the upcoming commercial property foreclosure boom. Most of those loans were short-term (3 to 5 years) and, unfortunately, they are all maturing now. At the same time, property owners who are expected to make good on those loans are experiencing heavy tenant losses and declining income.

The dark future for property owners translates into leverage for tenants. With lenders looking to refinance building with high occupancy rates and long-term leases, owners can expect to deal with overly confident tenants who won’t be shy about asking for favorable lease terms.

Source: news.cincinnati.com