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Distress in the Midwest

Positive signs are visible when looking at the level of distress in the Midwest. Most of the region's markets don't have the breadth of troubled loans…

By Robert Carr - Midwest Region Editor for GlobeSt.com and REAL ESTATE FORUM. | Updated on December 09, 2011

Positive signs are visible when looking at the level of distress in the Midwest. Most of the region’s markets don’t have the breadth of troubled loans and properties seen in other large markets across the country. A notable exception is Chicago, though the city is starting to gain back some swagger with more office deals. However, distress will continue to grow in the Midwest, experts agree. Though the region has fewer foreclosures now, the number will increase in 2011, and troubled properties will take longer to fix than in the rest of the country, says Brett Thompson, a principal with Ernst & Young in Chicago. Investors, and tenants, are quicker to return to properties on the coasts and in warmer climates, whereas the Midwest tends to follow recovery trends by a year or two, he says.

Up until now, Thompson says there’s been just a trickle of distress in the Midwest, because lenders are being strategic (read: realistic) about the chances of getting an asset off the books. “There’s been no flood of Midwest distress,” Thompson says. “But delinquencies hit record levels in the fourth quarter, and we’re starting to see more activity.”

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