Commercial Mayhem

Alarm bells are ringing nationwide due to concerns about commercial loan defaults. Unlike residential loans, commercial loans typically operate on a non-recourse basis, allowing borrowers to simply return the keys to the bank if they can't meet their obligations. These loans usually reset every 3-5 years, and many that originated around 2018 are approaching this critical period. The prevailing concern is that numerous commercial properties won't produce sufficient cash flow, leading to a wave of defaults and property surrenders.

Thanks to data from my former company, CoStar Group, I am well-positioned to monitor the situation. Across the country, there are 1,661 properties that are either in default, bank-owned, or undergoing the foreclosure process, encompassing 126 million square feet of commercial space with an average vacancy rate of 23.8%.

Breaking it down regionally:

Regional highlights:

  • #Connecticut: 22 properties, 2.6M sq ft.
  • #RhodeIsland: 10 properties, 243K sq ft.
  • #Manhattan: 128 properties, 8M sq ft & a staggering 28% vacancy rate.

Stay informed as I keep an eye on CT, RI, and NY trends. ???????? #RealEstateTrends #PropertyDefaults #CommercialDefaults

Posted by Tim Bray on


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