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Commercial Properties Struggle while Homebuilders are Experiencing Gains

Posted by VIP Realty on Monday, February 1st, 2010 at 12:39pm.

San Antonio commercial real estate is still struggling, make no doubt about it. The number of San Antonio commercial properties that fell into foreclosure in 2009 is a clear indication that this sector of the real estate market in San Antonio has a long way to go.  Commercial foreclosures for San Antonio commercial real estate rose nearly 55 percent during 2009; in other words, there were 863 commercial property foreclosures in San Antonio in 2009, compared with 557 in 2008. Throughout all of the trouble that the San Antonio commercial real estate market is experiencing – and is likely to experience in the months ahead – economists note that the trends of the past year can’t even hold a candle to the real estate collapse of the 1980s.

Commercial Foreclosures Peak for Older Buildings

Case in point: many of the commercial foreclosures in San Antonio in 2009 were from smaller, older buildings in less desirable parts of the city. However, larger, nice properties have also not been spared the brunt of the foreclosure crisis. Construction in San Antonio has slowed, and vacancies have risen. The hardest hit sector of the commercial real estate market was industrial buildings. There were 47 industrial building foreclosures in San Antonio in 2009. Apartment building foreclosures also experienced a huge jump, with 87 foreclosures posted in 2009, compared to 33 in 2008. Retail foreclosures were up, as well, from 51 in 2008 to 66 in 2009. The surprising factor in the commercial sector, however, was that office building foreclosures dropped eight percent from 2008 to 2009.

A Bright Spot

Because the commercial real estate market in San Antonio is linked to the residential real estate market, and usually follows the trends of the residential real estate market, many analysts turn to the residential real estate market to gauge the future of the commercial real estate market. Luckily, after nearly three years of double-digit drops in the residential market, home builders are starting to build once again because demand is on the rise. The residential real estate market clearly hit bottom in 2009, and is now on the way to a rebound. This is good news for home builders; and perhaps even better news for commercial real estate builders and investors.

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