Monday, August 13, 2007

Are we seeing spillover into Commercial?

I spoke with one of my bay area clients this morning and he informed me that the $1.8B buyout from Starwood Capital Group for Mission West Properties (as mentioned in a recent article) fell through this morning. Apparently, Starwood could not secure financing for the deal and has dropped their bid to purchase the Silicon Valley industrial inventory. We also spoke about several other commercial deals that he and other developers are "watching very closely" to see if there is going to be a spillover effect in the commercial sector.

As I pulled up my Monday morning national journal reports, I noticed that commercial foreclosures in North Texas have increased 30% over last year at this time (highest in the Metroplex since 1994). From the article:

Commercial foreclosure postings in North Texas through August have reached their highest level in 13 years as the downturn in the housing market clouds the broader real estate picture.

So far this year, 806 commercial buildings have been listed for the auction block in the Metroplex, according to Foreclosure Listing Service, an Addison-based firm. This year's total is 30% higher than the 621 postings in the same eight-month period last year.

Every commercial property category was hit. Retail foreclosure postings are up 42%, apartments are up 37%, office postings are up 36% and industrial postings are up 24%. Postings are up 26% in the miscellaneous category, which includes uses such as restaurants, car washes and day care centers.

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