Phoenix Foreclosures for Sale up in the Commercial Sector

by Peter Vernon on cities

Phoenix foreclosures for sale have been growing in the commercial and industrial sectors, based on several published reports of industrial and commercial foreclosure sales in the Phoenix metro area in recent weeks.

Among these is the sale of the foreclosed La Mesa Village apartment complex in Mesa to Los Angeles-based Ennabe Properties for $5 million. According to Marcus & Millichap executive Alon Shnitzer, Ennabe beat out 21 other prospective buyers because Ennabe proved its capability to pay in cash and close quickly.

Shnitzer explained further that Ennabe paid a low price because the 256-unit property had a low occupancy rate and a negative cash flow. The multifamily building was formerly owned by another Los Angeles real estate firm, SRS Properties. Because of the falling occupancy rate and the troubled cash flow, SRS failed to pay its loans and ultimately fell into foreclosure early this year.

Nancy Ennabe said that the property can become profitable with upgrades. She added that her company is looking for other Phoenix foreclosures for sale, including non-distressed multifamily properties with strong profit potentials.

Based on data from Colliers International, vacancies in the industrial and commercial sectors in the Phoenix metro area rose by 17.5 percent in the July-September quarter because of the high unemployment rate, lack of available credit and lack of business tenants.

CB Richard also affirmed the Colliers finding, but its vacancy rate report shows a lower rate at 15.8 percent, an increase from 15.2 percent in the previous quarter and a substantial increase from 12.1 percent in the July-September quarter in 2008.

The biggest drops in average lease rates occurred in the northeast part of the Phoenix metro area and the lowest drops occurred in the southwest portions. The vacancies have pushed down industrial construction from 5.8 million square feet of space in last year’s third quarter to only 1.2 million in the July-September quarter.

However, sales of non-distressed commercial buildings in the Phoenix metro area stepped up. Among these was the sale of the 316-unit Crossroads multifamily complex at the Deer Valley area in Phoenix by AIMCO to Olympus Properties for $31,200 per apartment unit or a total of $9.85 million. The complex was constructed in 1982.

Another was the sale of 72 condo units at the Mark condo complex in Scottsdale by Toll Brothers Arizona to Silverman Companies, which plans to reposition the project and resell the condo units.

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