Charlotte Foreclosures Hit the Commercial Property Market

by Peter Vernon on cities

The impact of Charlotte foreclosures is showing in the city's commercial property market as stressed loans comprise almost a third of all commercial structures in the area. Majority of the commercial properties in the city do not have late payments, but there had been worries about their owners' ability to continue regular payments due to a handful of factors.

Just like foreclosed homes in North Carolina, these buildings are facing adversities that depress their values, including declining rents, lease expirations, drop in occupancy and bankruptcy of parent companies. These factors put into question owners' capability to continue paying the properties' loans.

Meanwhile, some of those that are not stressed have seen better times and continue to deteriorate each month. Some are delayed in paying their loans, while a few are on the brink of getting foreclosed or are already foreclosed on, much like the situations in most government foreclosure homes in the city.

Buyers can find foreclosed homes for sale in big numbers at the city and market analysts are predicting that it is possible that commercial properties will follow residential structures' path. According to them, commercial real estate can decline further in Charlotte in the coming months.

There are several developments considered by experts as signs that the commercial property industry is growing vulnerable to Charlotte foreclosures. One is that Ballantyne Village, a successful and high profile development project, is currently facing possible foreclosure. Another is that the entertainment venue, EpiCentre, has sought bankruptcy protection in June in an effort to avoid foreclosure.

There is also IBM's former base at University City being sold in a fire sale in March as a result of the previous owner defaulting on a loan worth $120 million. These developments, along with the condition of commercial packaged mortgage loans, led real estate experts to predict that the commercial property sector might be in for a rough time.

According to them, the percentage of packaged loan payments delayed for 60 days or more have risen by as much as three times compared with the previous year. Statistics showed that, as of June 30, 2010, loans in this condition are up 6% from the same period of 2009, which means that this percentage has the potential of ending up as Charlotte foreclosures.

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