The COVID-19 pandemic has caused economic ripples that are continuously felt to this day, and many experts warn that commercial real estate is set to be among those industries hit the hardest, as many commercial building owners are set to default on million and billion-dollar loans. Lenders are balancing the risk of an expensive and potentially disastrous commercial foreclosure process versus lost loan payments.
The experienced professionals at Total Lender Solutions have helped lenders secure their assets during commercial foreclosures for the last fifteen years, walking lenders through federal and state compliance laws to ensure the best possible outcome. In our experience, the foreclosure of a commercial real estate building is not always good or bad but can have multi-faceted consequences for a local community.
Read more about our insights on commercial foreclosures and the local economy.
Changing Real Estate Utility
In the commercial real estate industry, many property owners are rethinking how their spaces are used, converting spaces with rising vacancies, like office spaces, into multi-purpose spaces like residential, retail, event, and more. These changing perceptions about how commercial spaces are used have dynamic implications for local economies. Oftentimes, these buildings are converted once the property has changed hands after a foreclosure. Foreclosures have the potential to shift the makeup of local economies.
The Complexity of Housing Costs
Commercial foreclosures may result in consequences for the residential real estate industry. Commercial real estate often dictates local tax revenue and, in turn, property values.
It is not uncommon for new apartments to rise where old ones were foreclosed. New apartments can have good or bad impacts on the local economy, largely depending on the value of the apartments and the value of the existing homes and apartments in the surrounding area. According to the Times, economists still debate what types of properties to build or eliminate to decrease the high cost of living, so it may be too soon to say how apartment foreclosures may affect a local community.
Reduced Spending and Job Loss
Generally speaking, local businesses are good for local economies in increasing jobs and increasing consumer spending. A loss of commercial property may result in decreasing business confidence, which may deter investors and businesses from building new commercial businesses in the area.
If commercial businesses suffer, it can have long-term effects on those who rely on local suppliers, leading to economic slowdown for the long term.
A Trusted Partner for Lenders During the Commercial Foreclosure Process
Overall, a foreclosure of a commercial loan can have all sorts of potential effects on the local economy, although the exact impact is largely dependent on the scale of the foreclosure, the type of property that was foreclosed, and the state of the local economy itself before the foreclosure.
“To me, it’s important to remember that commercial foreclosures are often the result of general economic downturn, not the cause,” says Total Lender Solutions CEO Randy Newman. “This is somewhat good for lenders because it means that if they pay close attention, they can arm their borrowers with the tools they need to stay out of default.”
A plan is a valuable tool to help protect lender assets. Lenders don’t have to fear the foreclosure process when they have an expert on their side to ensure the process goes smoothly. We work in ways that are non-intrusive to the work your team does to manage their current customers, along with little intrusion into the community at large.
At Total Lender Solutions, we help lenders reach a favorable outcome so that both lenders and borrowers receive fair treatment during the process. We complete nonjudicial foreclosure and operate in Washington State, Oregon, California, Missouri, Arizona, Texas, and Nevada. Contact us today for a free consultation on your commercial real estate properties.
