Vacancy rates, commercial mortgage defaults on the rise - Business First of Columbus:

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On the heels of reports showinv higher vacancy rates in the officd and industrial markets in all three ofthe region’s another report showed higher delinquency ratesw for commercial properties. In looking at the $16.i9 billion in commercial mortgage-backed securities in South Horsham, Pa.-based found that 1.94 percen of them were delinquentin That’s up from 1.04 percent in Realpoint put 20.1 percenft of the South Florida CMBS loans on its watchn list – meaning the researcuh company has flagged payment defaults, loan maturit risk, low occupancy levels, poor borrower finances or othef material issues. That’s up from 19.4 percent on the watcyh list in December.
Both of those measures came above the nationa averagesof 1.72 percent delinquency and 19.1 perceng on the watch list. As of Dec. 31, commerciak mortgages held by banks and thrifts were actuallg in worse shape thanCMBS loans, with a 2.7 percent delinquency Frank Innaurato, managing director of CMBS researchg for Realpoint, predicted that delinquencyu of these securitized loans would more than double by the end of 2009. Many commercialk properties were underwritten at such inflatec values that their debtservice can’t supportf the cash flow, he said.
“Borroweras are crying poor and coming back to lendersrequiriny forbearance, debt service relief or changeas in interest rates,” Innaurato said. “Some of it is being causedx by the tenant base cominf to borrowers in the retail or office front and asking to renegotiatwe the leases sothey don’t go out of In other cases, commercial loans maturde and properties can’t obtain new he said. Commercial foreclosures have been sweepinhg acrossSouth Florida. Amonv the largest commercial projectzs facingforeclosure suits: Miami Airport Center, a 597,901-square-foot office/warehousre complex near .
Coral Landings III, a -anchored shoppinfg center in Coral Springswith 114,956 squares feet completed and nearlu 50,000 square feet under A 137,066-square-foot former call center buildinb in Boca Raton. Courthouse Commons, a new 99,395-square-footf Class A office building in downtown WestPalm Beach. The 417-room Royap Palm Hotel in Miami Beach. The first quarte r South Florida market view by showe that the office vacancy rate climbedto 23.8 percent in Palm Beach 15 percent in Broward County and 11.
4 percent in Miami-Dade The credit crunch has hurt commercial real estate, but the default rate won’t come anywhere near the problems facing residential real said Rick Miller, South Floridw managing director for CB Richard Ellis. “Th e fundamentals on the commercial side remain pretty he said. Many financial institutions don’t want to take over commercial properties, and are instead reworkingv loans, putting them into receivership or encouraginga sale, Miller said. Realpoint’a Innaurato noted that the number of CMBS loanxs late on payments has increased nearlty twice as fast over the past six monthds as the number of themin Meanwhile, there are 1.
8 million square feet of commercial projects under construction in downtown Miami and the Brickell area that should be ready in 2010, with 13 perceng preleased, the CBRE report stated. Much of the speculatived space coming online won’t be absorbed for said Michael Adler, chairman and CEO of the , a Miami-basedx commercial property owner. “Untio there is a growing economy, you’re not going to have a need for Adler said.
“We’re in for quite a few yearsz of fairly high vacancies in theoffice