Inquiring minds are looking toward The Dallas Morning News and a wonderful article by Sheryl Jean:
Ann Strain walks Junebug, a Boston terrier, past a ghost town – hundreds of abandoned apartments with broken windows and weeds.
Neighbors think squatters have lived at times at the Signature Pointe apartments on Lovers Lane, just east of North Central Expressway. The Dallas police SWAT team trains there.
The apartments were emptied of tenants at least 2 ½ years ago to make way for new rental units and retail, but that never happened. Now a bank owns the 13 acres.
“It’s pulling the value of the neighborhood down,” said Strain, a condo owner who has lived across the street for 10 years. “I’ve seen lights at night, but I don’t know if it’s cops or crime.”
Neighbors’ concerns are an invisible consequence of landlords and investors across the country being unable to make their mortgage payments or secure new loans on commercial property that ends up foreclosed or forfeited to a bank.
Skeletons of unfinished buildings, weed-infested vacant lots for projects that never got off the ground and for-sale signs are the more visible remnants of an overextended commercial real estate market caught in the jaws of the biggest financial crisis and economic downturn since the Great Depression.
It goes on…and on, and on…
Nationally, distressed loans on office buildings, apartments, retail stores and warehouses totaled $170 billion. Despite recent signs pointing to an improving commercial real estate market, those numbers are expected to increase.
The more than $1.4 trillion in commercial mortgages coming due this year through 2014 will be difficult to refinance and could derail economic recovery.
“It’s the silent thing out there that everyone talks about,” said Dan Busch, president of Structure Tone Southwest in Dallas, one of the area’s biggest general contractors and one with no debt. “We all understand that it’s a big system and we’re all tied to it.”
A new wave of defaults could trigger more property vacancies and more bank failures. Commercial mortgage defaults contributed heavily to the nation’s 255 bank failures in the past 20 months, including six in Texas, with more than $37 billion in losses. A congressional panel projects that bank commercial mortgage losses could hit $300 billion.
The entire article is well worth the time.
Filed under: Uncategorized |