Some commercial property owners in Phoenix might be feeling the squeeze as their offices sit unleased and current tenants fail to pay rent or decide not to renew their leases. This mirrors a nationwide trend of a downturn in commercial property occupancy that is putting commercial property owners in a financial bind as they consider their options to recoup their financial losses.
Commercial property occupancy is down
Commercial property vacancies are dropping significantly, spelling trouble for the owners of these buildings. At the conclusion of the first quarter, approximately one-fifth of commercial offices across the United States sat unused and unrented. Moreover, as current leases end, commercial tenants are moving to smaller rentals more in line with their business needs.
This trend means commercial property owners are not receiving the rent needed to pay both their mortgages and their investors. Some commercial property owners are now past-due on their mortgages, with the delinquency rate over the past six months reaching 4%, the highest it has been in five years.
Options for commercial property owners
Commercial property owners do have some options if their offices are not being leased or if current tenants are not paying their rent. If offices are sitting unleased, it might be time to consider selling them. While the commercial real estate market is experiencing its own trouble these days, according to some, if commercial property owners can find buyers, it could be the answer to the financial bind that they find themselves in.
Commercial property owners might also face the possibility that they have to evict their tenants for failure to pay rent. The commercial property eviction process differs in some ways from the residential property eviction process, but it is still an option that allows commercial property owners to recoup some of what they lost. Moreover, it gives them the chance to find commercial tenants who are able and willing to pay the required rents.