Vacant commercial properties abound

Written by Alex MacLean, The Union Democrat June 20, 2012 03:36 pm

By ALEX MacLEAN

The Union Democrat

Many area realtors say the economic crisis of the past few years has dealt a blow to commercial real estate in the Mother Lode as fewer people have the capital to open new businesses and loans are increasingly more difficult to obtain.

Realtors’ associations in both Calaveras and Tuolumne counties report that they have been selling fewer commercial properties since 2007, when the nation’s housing bubble peaked prior to one of the worst economic recessions in U.S. history.

“It’s hard to sell businesses, it’s hard to sell houses and it’s hard to sell land,” said Betsy Duncan, realtor and former president of the Calaveras County Association of Realtors. “It’s just a symptom of the larger problem.”

Duncan said there have been three commercial properties sold since June 2011, according to the Calaveras County Multiple Listing Service, a database used by real estate brokers to track listing information. 

She noted that more properties are being sold by out-of-area agents since the economic crisis began, which would not be tracked in Calaveras County’s MLS, but the three sold by local agents over the past year are 14 fewer than all of 2005 when sales were at a peak.

“The trend has not been good. Nothing got better with the economic crisis,” Duncan said.

There are currently 36 commercial properties listed for sale in the county’s MLS with about 40 percent of them having been on the market for more than a year, according to Duncan.

Business hasn’t been looking any better in Tuolumne County either.

Commercial real estate sales severely declined in 2008 and have stayed low ever since, according to statistics from the Tuolumne County MLS provided by the Ann Ritchie, president of the Tuolumne County Association of Realtors.

The statistics show there were 25 commercial or industrial units sold for a combined total of about $21.9 million in 2007. Sales dropped to seven units in 2008 for a combined total of about $3.8 million.

The average number of commercial or industrial units sold annually has remained at about seven, with four sold and two leased since the beginning of this year, according to the county’s MLS.

“It’s been extremely hard,” said Adam Wilson, a local real estate broker currently listing several commercial properties in downtown Sonora.

Wilson said a number of factors have contributed to tough market, including people lacking the disposable income to put into their business endeavors and banks tightening their grips on business loans.

“They’ve really toughened a lot of those standards and a lot of people just don’t have the credit they used to,” he said.

Tuolumne County planners say they’ve been issuing fewer residential and commercial building permits in recent years as well, which they say correlates with the economic downturn.

Mike Laird, of the Tuolumne County Community Resources Agency, said the county was issuing building permits for about 400 new single family residences and about 20 commercial buildings annually before 2008. Now, those averages have decreased to about 40 to 60 single family residences and about three commercial buildings.

He said the county is issuing nearly the same amount of permits for making additions or alterations to existing structures. More than 1,500 were issued last year, compared to 1,680 in 2007, which include both residential and commercial structures.

Laird said the numbers suggest more people are rehabilitating and remodeling existing businesses rather than building new ones, which is not an ideal trend for a local economy that has traditionally centered around construction.

“It’s not the big ticket items anymore,” he said of the types of permits being issued.