RCA in the commercial property press:

Empty storefronts a sign of the times

The Press Democrat reports: Empty storefronts and deserted office parks are stark evidence that housing isn’t the only troubled segment of the real estate market in Sonoma County.

The commercial sector is taking a pounding as stores and companies go out of business, drying up demand for industrial, office and retail space while triggering a rise in foreclosures.

The most significant change is in the historically strong retail market. The departure of mainstays like Circuit City and Mervyns helped drive the retail vacancy rate to 8.6 percent in the first quarter — more than twice the figure of two years ago.

The lack of business could lead to bigger trouble as rents and mortgage payments come due.

Jessica Ruderman, senior analyst for the market research firm Real Capital Analytics, said 14 buildings in the Marin-Napa-Sonoma market worth $123 million are in default or foreclosure. That’s up from seven distressed properties in the region four months ago, she said.

In the Bay Area, $2.6 billion in commercial real estate is on the brink, compared to $373 million in December, Ruderman said.

“I think we’ll see more properties get into trouble before this is resolved,” Ruderman said. “We’re waiting for federal bailout money to flow through, but we haven’t seen it yet.”