Although the New Year started off with a “flurry of foreclosure actions” on commercial buildings – particularly apartment buildings, on which lenders are likely to recoup their losses at this time – most experts believe that foreclosures will be the exception in 2011 rather than the rule in the commercial real estate arena[1]. While areas like Las Vegas, Detroit and Miami will likely experience higher volumes of commercial foreclosures due to the overall stress on the real estate market as a whole and lenders in these areas, other areas of the country like Sacramento will likely favor “workouts” between lenders and new or existing borrowers rather than repossessions.

Ben Thypin, a senior market analyst with Real Capital Analytics, believes in particular that markets that did not get “overheated” during the boom will likely squeak through now with commercial properties intact and unforeclosed. Many lenders opted in 2009 and 2010 to “extend and pretend” on troubled loans, essentially banking on their being a way to resolve delinquent accounts or settle up with borrowers later once the commercial market had bottomed out. Now that most experts are predicting that there will not be a “double dip” in the commercial sector, lenders, buyers and borrowers are starting to move on these types of resolutions.

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[1] http://www.bizjournals.com/sacramento/print-edition/2011/01/21/commercial-market-may-escape-foreclosure.html