The overall health of the commercial real estate market in Bexar County is improving as foreclosure-posting activity during the first five months of the year dropped 13 percent compared to the same period last year.
From January through May, total commercial foreclosure postings fell from 393 last year to 343 in 2011, according to a recent report from Foreclosure Listing Service Inc. This drop in foreclosures is a positive turnaround compared to the 17 percent increase recorded last year. And of the major markets reported in the study, Bexar County saw the sharpest decline, with the Austin and Dallas/Fort Worth areas recording a 6 percent and 3 percent drop in foreclosure listings, respectively.
“We expect the market to incrementally get better,” said Jack Duke, president of DH Realty Partners. “A big reason is that we’re seeing interest from prospects coming to San Antonio from other cities looking to get a foothold here.”
The largest dip in foreclosures occurred with land, which saw postings fall from 91 in 2010 to 59 this year, a 35 percent drop. While land deals haven’t been popular during the recent economic climate, interest in small- to medium-sized parcels has picked up since the beginning of the year, Duke said.
George Roddy, president of Foreclosure Listing Service, added that when money for land development became scarce, speculators were left with the debt.
“I do not expect the fallout for land owners to be over,” he said.
Although apartment communities, office buildings and retail centers all showed slight drops, the overall market remains flat.
The only market that saw a jump in foreclosure posting was the industrial market, which historically has been the most stable, Roddy said. The report shows that foreclosures increased from 16 postings last year to 28 this year, a 75 percent increase. Despite the jump, industrial buildings only amount to 8 percent of all commercial real estate foreclosures.
Duke said that he attributes the rise to too much supply online.
“The industrial market is starting to have problems because it’s just overbuilt and it has been slow filling those vacancies,” he said.
More than half of all commercial real estate foreclosures occurred in the miscellaneous market, which includes hotels, auto shops, restaurants and duplexes. The number of miscellaneous foreclosures fell 12 percent from 202 postings last year to 178 this year. One of the most significant postings in this market is the historic Sheraton Gunter Hotel, which has been listed for the second month in a row after its owners defaulted on a $40 million note.
Still, while the numbers paint a nice picture, Bonnie Brown of Foreclosure Listing Service said that until the economy gets stronger and sees sustained job growth, the commercial real estate market will continue on a roller coaster ride toward recovery.
“It’s welcome no matter how small the drop,” she said. “But we’re not out of the woods, yet.”
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