Commercial real estate has been largely derailed by the slow downs that hit the property market when the recession had a landfall in 2008 and recovery so far has been quite remote especially for most local property owners.
In Taylor County, Richard Petree of the district office appraisal office said that the situation is flat at best and there exist an oversupply of commercial properties but with occupancy level of only 80 percent, particularly in the Abilene area.
Petree said that shopping centers were teeming not with shoppers but with shops shuttered while office buildings were not far behind on vacancy woes but with slightly better figures.
In order to use idle buildings, some enterprising businessmen resorted to conversion of former retail centers and one noticeable example is the once Toys R Us store now being temporarily utilized as a training center for wind turbine employees.
Petree said that recovery for commercial properties is still a long way for his county and the same goes in the national arena, which would have to wait until 2014 for some fresh air to breathe as most analysts believed that significant development may occur at around that time.
That hope may be underpinned on the notion that real estate investment trusts or REIT could take advantage of the opportune time to snatch bargains for the having in the commercial market, according to Erik Johnson of Paul Johnson and Associates.
He said that online shopping effectively attracted many shoppers from going into city shops and instead conduct their browsing and buying at the comfort of their homes, a factor that Petree said should leave a lasting dent on the retail sector of commercial real estate.
Also, more segments of commercial properties were hurting due to the ongoing problems and chief among them was the hospitality sector, which Petree said suffered dips in occupancy rates with an average of only 60 percent confirmed bookings.
The sector’s value was also reduced by 13 percent due to the dismal turnovers, further applying more pressures on owners to meet interest and principal payments though Petree said that lenders were cooperating with troubled borrowers to fend off the possibility of numerous foreclosures.
Johnson said that the overall commercial property tax roll value in Abilene had barely moved from the $1.02 billion posted in 2009 to the current figures of $1.03 billion as he suggested that industrial companies should shop for space at Abilene, where “there’s probably half a million square feet of (industrial) space available for lease.”
He added though that office space in the same area has been dwindling lately amidst the upgrades being conducted by some businesses, which were looking to relocate but may encounter limited availability of space.
Johnson said that the positive development in the office segment of commercial properties were encouraging but ho noted that retail is still proving to be a snag for the industry as he stressed that “they’ve probably got the largest amount of vacancies.”
Experts said that recovery in commercial market is still hampered by the difficulty that owners were going through in paying up their mortgage loans though real estate analyst Mark Dotzour of Texas A&M University offered some optimism when he said that consumers are returning to the market.
At the same time, Dotzour cautioned that “half of all commercial loans will be under water by the end of the year and there are going to be losses for banks and investors.”