Manatee County's commercial foreclosure rates rise

PALMETTO — Shelly Ferrell’s wholesale gourmet-food business is doing well enough that she’s thinking of looking for larger quarters.

But she recently learned of another incentive to find a new home for Coconut Bay Trading Co. Her landlord is facing foreclosure.

“I might have to do it sooner than I thought,” said Ferrell, who did not know about her landlord’s foreclosure lawsuit until the Herald told her.

A lender sued to foreclose on the 5,475-square-foot building at 1100 Eighth Ave. W. last month, claiming Kalamira Properties LLC and a related company defaulted on $900,000 in loans.

It was among more than a dozen commercial properties in Manatee County that lenders targeted for foreclosure in May, according to court records. Others include several lots in the Creekwood East Corporate Park on Lena Road, a Holmes Beach office building that has the Anna Maria Island Chamber of Commerce among its tenants, and an unbuilt professional-office parcel in Lakewood Ranch.

Other well-known commercial properties that have fallen into foreclosure this year include the Beach Inn development on Holmes Beach and the historic Pink Palace hotel in downtown Bradenton.

They joined a growing list of local commercial properties falling into foreclosure as the foreclosure crisis spreads beyond its residential beginnings to ensnare office buildings, motels, shopping centers and industrial lots.

Experts say it’s just the tip of the iceberg.

“There’s a large number of commercial properties out there that are not making their mortgage payments, but the bank hasn’t started foreclosure because of the backlog,” said Bryn Merrey, a regional manager in the Tampa office of Marcus & Millichap, a national commercial real estate brokerage firm. “There’s a lot more out there than people realize.”

Commercial-mortgage delinquency rates have more than doubled since the last quarter of 2008 and now are higher than during the 2001 recession, the Mortgage Bankers Association said in a recent report. About $1.36 billion of commercial property in the Tampa Bay region is known to be in default, foreclosure or bankruptcy, according to Real Capital Analytics.

Landlords are falling behind as their tenants, battered by the recession, struggle to pay their rent or move out. About 13.2 percent of Manatee’s office space and 8.6 percent of industrial space sat empty in the first quarter, according to a recent Grubb & Ellis market report.

Analysts predict commercial delinquencies and foreclosures will keep increasing as vacancy rates climb and commercial credit remains tight.

“We’re going to see this continue for a while,” said Don Lombardi, an accredited land consultant in Grubb & Ellis Commercial Florida’s Tampa office. “The commercial market is following the housing market into this deepening slump. Retail was the first one to feel the pain. They’ve felt most of it. Offices are beginning to feel it. We’re seeing rents decline, and industrial is feeling it lately.”