Stalled Orlando Commercial Development Sites Could be in Trouble, Livingston Cautions

Commercial property foreclosures are minor compared to residential, says longtime area real estate investment analyst

MAITLAND, Fla. --- Commercial property foreclosures in the Central Florida area are almost negligible compared to residential foreclosures, according to longtime area real estate analyst George Livingston, (top right photo) chairman of NAI Realvest in Maitland.

“There are few commercial property foreclosures so far and most of them comprise small, stand-alone facilities that do not represent massive risk for lenders,” Livingston said.

Foreclosures on stalled development projects could be more worrisome, Livingston added.
“A few large-scale development projects in the area are under the microscope,” Livingston said.

“For the most part, they reflect the current turmoil in the financial markets and lack of demand, as well as poor development planning,” Livingston cautioned.

Livingston said troubled development deals fall into three main classes.

“Some developers partner with land owners or acquire an option on a development site,” he said. “In those cases, property taxes, insurance and maintenance costs are still a drain, but options costs help to limit a developer’s risk.”

Developers who borrowed capital to acquire sites outright in anticipation of additional loans to develop the property are the ones most at risk, Livingston explained.

“A lender will usually require interest payments, and while rates may be low the payments on a $5 million loan are substantial,” he said. “And maintenance, taxes and insurance are still due.”

“The least risk scenario is to pay cash for the land. That lets you delay development if need be,” he added.

For more information please contact:
George Livingston, Principal, NAI Realvest 407-875-9989 glivingston@realvest.com

Janice Paiano, Director of Marketing NAI Realvest jpaiano@realvest.com

Larry Vershel or Beth Payan, Larry Vershel Communications, 407-644-4142