"The percentage is up, but the type of buildings is a good sign for the class A and class B buildings," says George Roddy Sr., president of the Addison, TX-based watchdog firm. "It's certainly not unexpected, given the tightening of credit and so forth." Residential foreclosure notices spiked to 46,277, up 31% year to date versus last year at this time and are predicted to hit 50,000 by year's end.
Roddy tells GlobeSt.com that commercial brokers have started to closely monitor his lists because they have investors looking to park capital that they've siphoned from the stock market. "Lots and lots of investors are sitting on the sidelines. They are taking money out of the stock market due to the volatility," he says. "The brokers are quite interested in keeping up with potential deals. We've had a lot of calls in the last 60 days and in the past 30 days, most particularly." Courthouse auctions will be held next Tuesday.
Roddy says commercial foreclosure notices have been steadily rising for "five or six months." For the second consecutive year, Tarrant County has exceeded Dallas County, which Roddy believes is the outgrowth of the difference in prices for assets and land. "In some degree that surprises me because Tarrant is generally behind in sales volume," he explains, adding that seemingly has changed in the past 18 months. As a result, Tarrant is facing more foreclosure notices these days--803 to Dallas County's 736. Collin County postings totaled 119 and Denton County, 125.
More notices have gone up on miscellaneous buildings than any other commercial asset. There have been 805 properties posted in the category versus 604 last year. The mix included five freestanding restaurants, five churches and seven convenience stores. Multifamily assets came in second with 321 notices while land ranked third, 289. Industrial postings totaled 139; retail, 121; and office, 108.
Notices rose 40% for multifamily assets and land since last year. Industrial postings are up 35%; office, up 23%; and retail, 22% higher.
Roddy says two retail tracts in Frisco are "primo properties" although they aren't large. One is a 4.5-acre tract near the junction of Dallas North Tollway and Platinum Drive, which went back to its lender in August, and the other was a deed give-back for 8.5 acres near Cotton Gin Road to erase a $4-million note.
So far, the metro's largest office foreclosure was a 273,495-sf, 13-story building at 12001 N. Central Expwy., which sold on the courthouse steps for $18 million to Catalyst CCT LLC of Los Angeles. Roddy says the 24-year-old building was encumbered by a $28.7-million loan before the September sale on the courthouse steps.
So far, foreclosure notices have been tacked up on pre-1970s' buildings, but Roddy says that could change as time passes. "We are seeing a softening in some markets in retail and office," he adds. In addition, loans will be coming due on many higher value assets, perhaps some pride of ownership deeds, which could translate into more postings and ultimately foreclosures of newer properties. He predicts it could "start to pop" in second quarter 2009 unless lenders start to "loosen up" so acquisition loans and refinances can be had.
Like others, Roddy says the North Texas market is in better shape than other parts of the country to withstand the global meltdown. He believes the proof lies in his just-released analysis. "If anything, the total was lower than we expected," he says.
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