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Commercial Properties Doing Better Than Residential in Florida

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By : John Cutts    99 or more times read
Real estate experts have long predicted the collapse of the commercial properties market of Florida, expecting the segment to get the worst end of the foreclosure crisis. They also predicted that the collapse of office buildings, industrial structures, retail centers and apartments will cause massive damage to the state's economy.

However, a year has gone and the gloomy prediction has yet to be proven true. Now, most industry experts believe that the predicted doom will not materialize, even while the state is still mired in foreclosure crisis. One factor helping commercial real estate maintains a better status than the residential property market is that foreclosure filings for commercial real properties can be contested.

According to real estate analysts, pursuing foreclosure on a commercial structure requires more time and resources which most banks are not willing to bother with. They added that most lenders prefer to extend loans on commercial properties and hope that property values will improve before loan expiration dates arrive.

An example of the relatively better condition of the commercial real property industry can be seen in Pinellas County where only 250 commercial real estate foreclosures have been filed for the current year, compared with over 6,000 residential property foreclosures. Most market analysts are predicting that the number of commercial foreclosures will continue to decline in the coming quarter, particularly as Florida is showing slow but sure signs of economic recovery.

Moreover, analysts stated that not a lot of commercial structures had been constructed since 2006 when the real estate industry started to decline. They stated that most of the supplies of commercial real estate in the region have already gone through the grind and the lack of new commercial buildings means that not much will be added to the current total.

Analysts have also cited the factor of losses to lenders. According to them, banks tend to lose more in foreclosing commercial properties like office buildings and retail centers than they would in residential foreclosures. It is relatively cheaper for a lender to repossess a ranch house than a shopping mall since the latter entails higher taxes and higher maintenance expenses, analysts have added.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.

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