Are better days ahead for commercial real estate? A new report by Real Capital Analytics shows the number of distressed commercial properties is plateauing and expected to continue to do so in the new year. Distressed properties–which include commercial properties that are in default, foreclosure, or repossessed by lenders–had totaled $171.6 billion in October 2011, a decrease from topping off at $191.5 billion in March 2010, according to Real Capital Analytics.

“The real test of the distress plateau is likely to be seen in 2012 and 2013, when about $300 billion in loans comes due each year,” according to a recent article in the Washington Post.

At $41.9 billion, the office sector continues to have the largest number of distressed commercial properties. But that number has been steadily declining–about 11.8 percent less than its peak reached in October 2010.

The apartment sector has the second-highest level of distressed commercial properties with $35.6 billion in troubled loans, according to the Washington Post article. Land and other property types have about $29.8 billion in distressed assets.

The metro areas with the largest number of commercial properties in distress is Manhattan, in which the total volume of distress properties stands at $11.8 billion, followed by L.A.-Orange County with $10 billion. Meanwhile, Houston has the lowest at $111 per capita.

Source: NAR
“Amount of Distressed Real Estate Could be on Way Down,” Washington Post (Dec. 26, 2011)