Now It Is the Turn of Commercial Foreclosures to Sting Las Vegas
May 22nd, 2009
Dark clouds are again gathering in the horizon – this time it is the turn of commercial foreclosures to sting Las Vegas. The developers are in deep sea struggling with increasing number of vacancy
Southern Nevada banks are gearing up for another stunning blow even before they have got over the home foreclosures. Since early this year of 2009 an increasing number of those who had developed offices, industrial areas as well as retail outlets are defaulting and courting foreclosure.
Real Capital Analytics of New York reported that Las Vega is now second coming after New York and just before Los Angeles as regards troubled commercial units. The value of the risky loans has shot up to $6.4 billion this year from $4.7 billion in the first few months of 2008. The list is inclusive of offices, industrial units, retail outlets, casinos, condos and apartments. It shows that 26% of the commercial market is in the foreclosure zone.
Slowly national attention is beginning to focus on the problem. It could exceed the slump in commercial real estate during the first years of the 1990’s. It was this that triggered off recession at that time.
According to estimates of Wall Street Journal the banks may suffer losses to the tune of $250 billion because of commercial foreclosures. This exposure might lead to the collapse of 700 banks. The situation would worsen the credit crunch situation and call for greater interventions from governmental quarters with more bailouts.
Kevin Higgins of Voit Commercial said, “I think we are just getting our feet wet from a commercial standpoint. We are not even at our ankles yet. I think the general public for sure has no idea. People on Wall Street aren’t even talking about it publicly. This isn’t just the local banks’ money. This is big money, Wall Street money that lent on this stuff.”
Las Vegas has already been badly mauled by the housing related financial crisis. Many companies have lightened their working force and some have already downed shutters. This has led to commercial vacancies. With no business the tenants cannot pay rents. Without rent coming in the landlords cannot clear mortgage dues.
John Restrepo of Restrop Consulting said, “We’re probably going to see a wave of commercial foreclosures in Southern Nevada, probably the peak occurring in 2010 and probably heavily concentrated in the office market, followed by the unanchored retail market (smaller strip malls without anchor tenants). The only question is, how big the wave.”
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July 2nd, 2009 at 2:09 pm
[...] Twin Cities are facing a second foreclosure wave at a time when it has still not recovered from the first attack. Thousands had been drowned by the [...]