Residential real estate had a target on its back for close to a year as foreclosures rolled through the industry and hurt sales and real estate values. Now it’s the commercial real estate market’s turn.
It’s not hard to see the effect the tough real estate market has had on Dallas. Empty office spaces, unfinished projects, graffiti-defaced retail fronts and a near-complete lack of traffic in certain areas have left developers of the commercial real estate market flailing about, waiting for the tide to turn.
In fact, many multi-million dollar construction and development projects have been all but abandoned in and around the Dallas area, leaving the commercial real estate market in crisis mode.
Even high-end locations, such as Turtle Creek, have seen a decline in new construction projects. In fact, plans for a new, upscale boutique hotel were abandoned in Turtle Creek as the market headed south.
Foreclosures on the Horizon
Combine that with the many developers and builders who have decided to delay or cancel new commercial real estate construction because of the impending foreclosures and it’s easy to see why so many industry experts are holding their collective breaths to see where the market is headed.
The turnaround date is estimated for 2011 for the commercial real estate market in Dallas, based upon the unpredictable credit markets and the fact that lenders are still holding onto their wallets. Even developers with good credit are finding it nearly impossible to secure financing for their developments, thereby leaving the industry in a holding pattern.
That is, until, the foreclosures begin rolling in.
No new loans, no refinancing and plenty of credit problems have left the Dallas commercial real estate market in a precarious position. Loan defaults are incredibly high, and most industry experts anticipate that many commercial real estate loans taken out since 2005 are on the road to default.
In fact, property defaults for commercial property are up 12 percent this year alone, resulting in more than $500 million in foreclosed loans.
Many industry experts estimate that the Dallas commercial real estate market will experience distressed property selling over the next, two years.