Historically, Dallas has been known as the “business center” of Texas, with many lucrative opportunities for lenders to invest in office buildings and retail space. That still holds true heading into Spring 2024, but the market is experiencing change that might create unexpected challenges for lenders.
The team at Total Lender Solutions (TLS) analyzed the most recent commercial foreclosures in Dallas to look for trends that could help lenders mitigate risk.
Here’s what we learned.
Dallas Commercial Foreclosures by the Numbers
From the data we analyzed in PropertyRadar®, we found that in March 2024:
- There were 42 commercial foreclosures in the Dallas-Forth Worth Metropolitan Area
- The commercial foreclosures were not concentrated in one particular area of the Metroplex
- Most of the foreclosed commercial properties were hotels and office spaces
Curiously, hotels and office buildings are properties that should be doing very well in the Dallas-Fort Worth area. Let’s explore why these properties might pose a risk to lenders under certain circumstances.
Office Building Foreclosures in Dallas
In 2023, dozens of large companies relocated their headquarters to the Dallas-Fort Worth metro. In theory, there should be higher demand for office buildings and fewer foreclosures. Regardless, many larger office buildings in the region entered foreclosure.
For example, a sleek office building in Old East Dallas entered foreclosure with an outstanding loan balance of $13 million. Another significant foreclosure was an office building in Irving, this one located in a corporate district where other large companies were headquartered.
Many office buildings in the country are dealing with a substantial number of vacancies, caused mostly by the shift to remote work following the pandemic and the increasing popularity of eCommerce.
“Office buildings are struggling across the United States,” says Randy Newman, founder and CEO of Total Lender Solutions. “We’ve seen this in every market we’ve analyzed so far.
“So even in places like Dallas, where you see an influx of big companies, there’s still a lot of risk in the office sector.”
Hotel Foreclosures in Dallas
Hotel foreclosures were the costliest commercial foreclosures in Dallas.
For example, a hotel in Plano entered foreclosure with an outstanding loan balance of $137 million. This property, which was built in 1997, is located in an area with several large corporate headquarters and numerous hotels.
Newman points out that business travel is driving growth in the Dallas tourism sector. Older properties may have a challenge competing against newer, shinier developments.
“You can expect lots of competition between hotels that service business travelers. It’ll be a competitive market. Before investing, lenders should make sure that property owners have strong business plans and are ready to battle for market share.”
Feeling the Impact of Commercial Foreclosures in Dallas?
If you’re facing foreclosure on your hotel, office building, or any other commercial property in Dallas, contact Total Lender Solutions right away. Our team of real estate professionals is ready to assist lenders in Dallas and throughout the state of Texas.
We manage:
The TLS team has decades of experience helping lenders reach default and foreclosure resolutions that protect your assets and give you the best possible outcome.