Impending Commercial Foreclosures are Looming Large

March 30th, 2009 | Tags: Foreclosure Market

The clouds are gathering again with impending foreclosures looming large in the horizon. The home foreclosure pales into insignificance with this new threat according to legal pundits. In Minnesota and other places those who are owners of offices premises and retail estates are facing difficulties in being current in their mortgage repayments.

One of the threatened units is White Bear Lake in Minnesota famous for its coffee and chocolate treats. Nancy Poferl claims “We do have the best coffee in town”. Poferl and her partners are somehow holding on during these difficult days. Already the sharks have claimed one or two commercial houses near her shop. The landlord of the adjacent condominium complex is facing financial problem and has got a foreclosure notice. Poferl explained, “There\’s absolutely nothing wrong with the tenants, it\’s the owner of the property that had some issues.” The lenders have said that foreclosure has been kept on hold pending an understanding with the owner of the property.

Till date the number of commercial foreclosures in Minnesota have been negligible compared to residential foreclosures. But slowly the trend is picking up. Assessor Stephen Baker said that in Ramsay County there have been 7 commercial foreclosures in 2006. It has increased to 11 and 33 in 2007 and 2008 respectively.

In 2008 there had been 50 commercial foreclosures in Hennepin County said Tom May, the assessor. From 2008 the number of commercial foreclosures began to increase. It is yet to be seen what is in store for 2009.

Generally commercial foreclosures will not take on the appearance of residential foreclosures with units lying boarded up and vacant. This was the view of James McComb a realtor of Minneapolis. Rather most of the buildings and leasing spaces will continue to be open. It is just that the rent by the tenants will be directed to a new address. But this does not apply to all the cases. Some office units will be compelled to down their shutters. The more modest malls on the fringes of the cities have been badly hit by the economic slump. The reason for this is that people in general have cut down on their spending. Across America in 2008 as many as 6000 strip malls having pizza and karate shops or a dance studio have put out their lights. It is apprehended that 6000 more will shut down in this year.