Commercial real estate fares better locally

Tim Whitney

Commercial real estate owners have been nervous for months as they wait to see how their investments will fare after the coronavirus pandemic subsides.

With more office employees getting used to working from home and business people reluctant to travel beyond their immediate areas, office properties and especially hotels have taken a big hit.

Across the country, many retail properties are taking a beating as well. Nearly 20 major retailers — including such well-known national brands as Brooks Brothers, GNC, J.C. Penney, Neiman Marcus, Pier 1 and Tuesday Morning — have filed for bankruptcy this year. That number is expected to grow in the third and fourth quarters. It’s important to note, though, many of those retailers already faced financial and other challenges long before the onset of the pandemic.

According to recent reports, the delinquency rate — loans 30 days or more past due — for commercial mortgage-backed securities has neared an all-time high. Last month, the delinquency rate for the retail sector jumped to 18 percent, while the rate for hotel properties rose to more than 24 percent. Office and multifamily loans saw only a slight increase, and industrial properties stayed relatively low. Delinquency rates could worsen before they start to get better.

Now for some good news.

As they say, all real estate is local. And as Grand Junction and Mesa County continue to lead the way in recovering from the pandemic and its effects, the future looks brighter.

While there’s limited inventory in some sectors, pricing of most commercial properties for sale or lease has started to stabilize here.

The nation might not see the V-shaped recovery for which everyone hoped. But in Mesa County, it appears that recovery could occur.