Where Are All of the Commercial Foreclosures?

In a sea of bad news, locally and nationally, we would intuitively think that there is a multitude of bad commercial properties coming on line in the foreclosure arena. Passive investors and users alike should be well suited to sit and wait until that building or dirt comes on the block and they can grab it up. However the data illustrates a different picture for The Granite State.

From the beginning of the first quarter of 2010 through the end of the third quarter of 2011, there were 2255 property transfers each month* in the state. In any given month only 100 of these were labeled commercial (about 4.5%), while the balances were residential or unclassified. Commercial property transfers in the state, as the numbers show, are a small portion of the total number of deed transfers. It should be noted however that there are a large number of unclassified deed transfers, about 8%, which can skew the data.

 Back to the alleged tidal wave of commercial foreclosures that are coming on line. On average there are about 100 commercial property transfers each month, of these about 12% are foreclosure transfers. Keep in mind this is statewide and for all property types such as free standing, condominium and land. As a point of reference residential home, condo and land foreclosures, over that same period was 15%. While these numbers may sound high, keep in mind that in the last real estate recession in the nineties, our rate was up close to 20%.

Commercial foreclosure transfers in the state are far lower than the perception of what they should be and slightly less than the residential homes that are being foreclosed upon. What types of properties are getting foreclosed upon?

 Of 10 Commercial Property Foreclosures…

…1 is a piece of raw land

…1 is a commercial condo

…2 are multifamily property five units or above

…6 are commercial land and building

Beyond the numbers we are not seeing these foreclosure sales affecting the overall market in terms of huge discounts to value. Are prices depressed off their highs a few years ago? Yes. Are they taking the steep discounts that residential homes have taken? Surely not. The reason is that there is still demand and even when these commercial properties are purchased at foreclosure they are being resold, released or utilized. The next time the national press discusses the decline in value of commercial property, remember that The Granite State is fairing well.  

*Deed transfers, warranty, quitclaim and foreclosure deed transfers.