The recession pulled down whatever gains that the real estate sector has achieved during the previous years, with the housing market emerging as the biggest loser so far but recent developments were pointing to commercial properties as the likely new target.

In Frederick County alone, Costar reported of double digits vacancy rates in commercial spaces as Marty Lapera of Frederick County Bank had observed, “the commercial real estate market is very weak with the continued likelihood of declining values.”

Boasting of 25.2 million square feet of commercial space, Frederick County hosted the highest quality of commercial real estate lending, according to Lapera as he added that “three years ago, real estate lending was very profitable but as the economy deteriorated, so has commercial real estate portfolio quality.”

The area’s retail space seemed to enjoy good occupancy rate but the numbers were superficial if Earl Mackintosh was to be believed as he claimed that property owners were forced to cut down on rents and add amenities to keep tenants from leaving, a ploy that according to him further pressures the sector downward.

This discourages investors who were looking for a higher value of the property in the event that the market recovers as Mackintosh stressed that there were investors who would be willing to pour investments with small returns but better prospect in the long run.

He said that Frederick could still count on some solid commercial areas such as the downtown sector where structures are combined with residential space upstairs while the ground levels were being reserved for business purposes.

However, the recovery being hoped for by investors may be delayed for some time as funds to stimulate business activities were not restricted by banks which either not willing to lend or impose stringent equities from borrowers, with most banks asking for 20 percent for commercial real estate loans.

Mackintosh added that government rules on zoning, construction and the attending fees were source of discouragements for potential growth in the county, which also restrict job growth and the subsequent economic growth waited by many to fuel the much-waited recovery of the commercial real estate sector.

With these developments, plus the reality that banks were slowly withdrawing from the property market, the waited turnaround may not occur until 2012 as more commercial spaces were rendered idle by many companies decision to downsize and move out of Frederick.

Still, many remained optimistic as appraiser Steve O’Farrell of William G Bowen maintained that the market is now gaining some traction as he argued that the county has largely avoided the worst of the recession due to its proximity to the seat of the federal government, the District of Columbia.

O’Farrell asserted that Frederick performed a lot better in terms of employment rate as against Washington County though he conceded that no new jobs were being created lately but stability should return in 2011 or 2012.

He stressed that many high quality properties could still be found on the county’s market and it is not the time to sell of, which could be true as the local government recently revealed that inquiries for commercial spaces have increased in the past six months.

A county representative said that things were gradually picking up in the business community though construction of new commercial spaces in Frederick were somewhat hampered by lenders’ requirement of 50 percent of pre-sales or pre-leases prior to sitting down on a mortgage application.