Distressed Commercial Properties Increased in Los Angeles in 2010- By: John Cutts
The number of distressed commercial properties increased in Los Angeles, California last year. The rise was particularly felt by the hotel property segment, with 2010 foreclosure numbers almost double the total recorded in the previous year. Industry observers attributed the increase to the impact of the economic downturn on the hospitality industry.
According to data released by Atlas Hospitality Group, the number of Los Angeles distressed properties in the hotel sector reached 138 last year, up from 62 foreclosures recorded in 2009. Analysts stated that the rise in the number of hotel foreclosures in the city was caused by the recession which affected owners of hotels who took out renovation and expansion loans during the time when the economy was still going strong.
Statewide commercial real estate reports showed that California distressed properties also increased in other areas of the state last year when compared with year-ago levels. The data from Atlas showed that foreclosure cases in the Los Angeles commercial real property sector jumped by 16% during the October-December 2010 period compared with the July-September 2010 quarter.
For the whole state, hotels that are in default increased by 6.5% over the same period. The number of distressed commercial properties might have been higher, according to real property analysts, if not for an investment company's decision to buy the Extended Stay America property chain which was then facing bankruptcy. The deal saved more than 100 properties from foreclosure across the state.
According to Atlas, California's distressed property listing will continue to expand in the first six months of 2011 as more mortgage loans reach their due date. However, the firm also stated that the sector will start recovering by the latter half of 2011 as the state's economy achieves some improvement. Commercial property reports for last year showed that San Bernardino County accounted for the biggest number of foreclosed hotels in 2010, with the county posting a total of 17. San Diego County came in second at 16, with Los Angeles County recording 12.
Among the distressed commercial properties recorded in the hotel sector last year, the largest was the San Jose Holiday Inn located near the San Jose International Airport. The property is a 512-room hotel at the Norman Y. Mineta area.
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John Cutts has been educated in the finer points of the foreclosure market over 5 years.