Steady Increase in Commercial Real Estate Foreclosures Over the Past Year

Based on the data from the recent ATTOM report on U.S. commercial foreclosures, there is a noticeable trend that highlights the challenges and changes in the commercial real estate market over the past decade. The report indicates a significant increase in commercial foreclosures, rising to 625 in March 2024 from a low of 141 in May 2020—a time characterized by pandemic-induced economic shocks and responsive fiscal interventions. This sharp rise represents a 117% year-over-year increase and underscores a broader economic narrative where, despite short-term stabilizations, long-term market corrections have been a constant presence.

States like California, New York, and Florida have borne the brunt of these fluctuations. For instance, California experienced a dramatic 405% increase from last year, showcasing how regional factors and state-specific economic conditions have influenced foreclosure rates. This analysis not only offers insights into the challenges faced by the commercial real estate market but also highlights the sector’s resilience and capacity to navigate through a continuum of economic cycles.

The recent spike in commercial foreclosures has raised questions about the interconnectedness of the commercial and residential real estate markets. Historically, these two sectors have shown some level of correlation, as economic factors affecting businesses often spill over into the residential sphere. For instance, a downturn in commercial real estate can lead to job losses and reduced consumer spending, which in turn can soften the residential market. However, the current trends suggest a more complex relationship, with the residential market remaining relatively stable despite significant upheavals in commercial real estate.  In the coming months we’ll see if that trend continues.

US Commerical Foreclosures 2014 – 2024 (Chart)

US Commerical Foreclosures 2014 - 2024 (Chart)

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