Commercial Real Estate Market In Richmond Is Ailing
The Richmond-Times Dispatch reports: The commercial real estate market in the Richmond area is ailing and likely to get worse, much like the rest of the country.
Twenty-three properties here -- ranging from hotels to mixed-used developments, apartments and shopping centers -- are in financial distress, according to Real Capital Analytics, a commercial real estate research and consulting firm based in New York.
A year ago, only five properties locally were troubled assets.
A surge of foreclosures of commercial properties in the Richmond area and nationwide is expected in the next year, as borrowers face loans coming due and can find no source of refinancing.
"It's a universal problem," said Stevens N. Gentil, chairman of Grubb & Ellis/Harrison & Bates, a commercial real estate firm in Richmond.
"There's a high probability that any property acquired, financed and developed since 2003 is over-financed," he said.
In most cases, property values have dropped precipitously and borrowers owe more than their properties are worth.
What's more, the commercial real estate problem isn't limited to new developments. Many stores, offices, hotels and town-house projects built 30 years ago were refinanced -- and over-leveraged -- during the boom.
"It's not like in the early 1990s when Richmond was overbuilt and we slugged it out over three or four years," Gentil said. Builders stopped constructing then and supply eventually caught up with demand.
"This time around, the national economy is worse and we have some bigger, more fundamental issues," he said. "The market came back quickly in the '90s. Let's hope that is the situation now."
Others are less optimistic.
"I think it will get worse before it gets better," said Jessica Ruderman, a senior analyst with Real Capital Analytics. "Banks are still not lending money. Buyers and lenders don't agree on prices."
View the full article on The Richmond-Times Dispatch: Commercial Real Estate Market In Richmond Is Ailing
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Posted by: Mark Alferman