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In March, Blackstone Group President Jon Gray told Bloomberg that commercial real estate prices, which have been plunging since interest rates spiked, are “bottoming.” He noted that while vacancy rates are still rising, the fundamentals are looking better, and “now is probably a good time before rates come down to move.”

But are commercial real estate prices really hitting rock bottom? That’s a difficult question to answer without some degree of speculation.

What we do know is that commercial real estate foreclosures are continuing to rise, according to commercial property foreclosure counts provided to ResiClub by ATTOM Data Solutions, whose data goes back to 2014.

In March 2024, there were 625 commercial foreclosures, according to the data. That’s up 117% since March 2023, when there were 288 commercial foreclosures. It also marks the highest level for that month since March 2015, when there were 649 commercial foreclosures—a time when lenders were still working through the distress created during the 2008 financial crisis.

Click here to view an interactive version of the chart below.

These 10 states had the most commercial foreclosures in March 2024:

  1. California: 187
  2. New York: 61
  3. Florida: 60
  4. Texas: 55
  5. New Jersey: 42
  6. Pennsylvania: 27
  7. Georgia 21
  8. Ohio: 19
  9. Connecticut: 18
  10. Illinois: 17

California, which accounts for 11.7% of the nation’s population, was home to 29.9% of all commercial foreclosures in March 2024.

And while spiked interest rates have created distress in several categories of commercial real estate, given the nature of the sector’s variable debt, office real estate—which continues to struggle as remote and hybrid work proves sticky—is being hit the hardest.

Back in March, a 52-story downtown Los Angeles skyscraper known as Gas Company Tower was reported to be facing foreclosure after struggling with office vacancy for the past few years. The Gas Company Tower was appraised in 2020 at $632 million. Now, the building is worth closer to $200 million, based on a $141-per-square-foot price estimate for downtown Los Angeles office space by Barclays.

To be clear, what’s happening in commercial real estate, particularly the office sector, is a very different story than single-family housing, where fixed debt, a lack of supply, and a lack of distress have kept national home prices stable despite the mortgage rate shock. Real estate has never been a one-size-fits-all story.

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