Dallas Foreclosed Properties in Commercial Sector Soaring

Dallas foreclosed properties in the commercial sector are soaring, based on data from a foreclosure listing service in Collin County, Texas.

Over 2,000 commercial buildings have been listed for the Collin County foreclosure auction on November 3, an increase of 10 percent compared to postings for the November auction last year.

The most recent commercial foreclosure was the four-level Times Square retail and apartment complex along Collin McKinnery Parkway. Among the nearly 250 commercial buildings in the Dallas area included in the Collin County foreclosure auction, the Times Square property was the most expensive.

The development firm failed to pay its loan of $44.48 million, which it borrowed in 2006 to complete the project. The lender, Bank of America Corporation, will sell the building at the November foreclosure auction, based on legal filings.

Another recent commercial foreclosure was a 24-year-old office building along Lakeside Boulevard at the Telecom Corridor technology business center in Richardson. The owner of the Telecom building failed to pay his loan taken out in 2007 that has grown to $24.75 million.

A warehouse in Mesquite whose owner failed to pay his outstanding loan of $25.7 million has also entered foreclosure. The warehouse was foreclosed by Compass Bank.

According to the listing service, the total value of all Fort Worth and Dallas foreclosed properties in the commercial sector that would be sold off in the November foreclosure auction has surpassed $482 million.

Nearly 2,000 commercial buildings in the counties of Dallas, Tarrant, Collin and Denton have been foreclosed, according to the listing service, over 10 percent higher than last year.

Housing analysts said that if commercial foreclosures continue at current pace, the commercial sector will face a serious problem.

Based on a report from Moody’s Investors Service, the values of commercial real estate nationwide have fallen by over 40 percent from their levels in 2007.

Because of the collapse of many business enterprises, vacancy rates in the commercial sector have soared despite substantial discounts in rental rates.

According to the National Association of Realtors and Torto Wheaton Research, vacancy rates in the retail sector in August ranged from six to 20 percent in 47 major metro areas while vacancy rates in the industrial sector ranged from 8 percent to 21 percent. The nationwide industrial vacancy rate was 13.6 percent while the nationwide retail vacancy rate was 12.1 percent.

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