By Frank DeLoache

Three large commercial foreclosure proceedings in Cabarrus and Iredell counties in October and November come as no surprise to people who work in local commercial real estate. They say the commercial real estate market has not reached bottom yet.

Public records show:

• In Iredell County, Peoples Bank filed two, apparently related, foreclosure actions against Morrison Plantation LLC. According to records, on Nov. 23, Peoples filed a $3,918,000 foreclosure action on Lot 21 (1.92 acres) and Lot 2 (1.23 acres) in Morrison Plantation, the mixed-use development in Mooresville. On the same day, the bank filed a foreclosure for the same amount on 35.93 acres on Morrison-Plantation Parkway.

• In Cabarrus County, records show that First Trust Bank filed a $1,298,000 foreclosure action against Speedway Plumbing, 4909 and 4921 Stough Road, on Oct. 20. Then, on Nov. 14, Speedway Plumbing filed under Chapter 7 with the U.S. Bankruptcy Court for the Middle District of North Carolina, in Winston-Salem.

• On Nov. 23, also in Cabarrus, Bridger Commercial Funding filed a $3,410,000 foreclosure action against BACM 2006-5 Roxie Street LLC, on the commercial center at 1031 Northlite Commons in Concord. The center has a Concord ABC store, other small businesses and several empty spaces.

BLACK

Long-time real estate professionals, such as Parker Black, of Newport Properties, in Mooresville, say the commercial market has not reached bottom yet, and 2012 may see banks taking more development groups to court.

Commercial lenders are getting squeezed. Jim Beaman, corporate secretary for Peoples Bank, said the bank, as a policy, does not comment on such actions.

But according to the Sept. 30 Call Report filed with the FDIC, Peoples charged off $4,837,000 in “construction loans and all land development and other land loans” during the first nine months of 2011, while recovering just $225,000. That’s less than 5 cents on the dollar. Of course, charged off assets can be sold at any time, improving the overall picture.

N.C. Secretary of State records indicate Morrison Plantation LLC belongs to Carolina Income Management Group LLC, whose officers are J. Edward Kale, C. Rex Welton and John P. Singleton.

Kale and Welton have been the well-known public faces of the development off N.C. 150, several miles west of Interstate 77. The office number listed under state records is disconnected. Welton did not return a call to his home, and other numbers were not available for Kale and Singleton.

Bridger Commercial Funding, which foreclosed on one of the Cabarrus properties, shut down earlier this year because large banks were crowding out “smaller players” in the competition for the remaining good loans.

This is the beginning of a shakeout among the large commercial real estate lenders, according to Richard Parkus, an analyst at Morgan Stanley. “There are too many lenders, too few loans to make. It’s inevitable.”

For some developers and large property owners, the problem is having to refinance while they wait for the market to rebound.

Some developers’ five-year balloons, taken out in the gravy days before anyone even considered the possibility of a recession, are coming due. With the market still hurting, and banks more cautious than ever, it’s putting borrowers between a rock and a hard place, said Black, a former chairman of the Cornelius Planning Board who now serves on Mecklenburg County’s revaluation appeals committee.

“We just overbuilt a little bit,” one Lake Norman banker said. “Everybody was looking for dirt to build on, and then the market collapsed. ... Look at the vacancy rates and the deals being cut by landlords just trying to hold onto or get tenants. You see signs for ‘rent free.’ They’re cutting deals to get occupancy.”

Black said: “Commercial real estate, in my opinion, still has a long way to go.”

In residential, “we were one of the last to go into the recession and one of the last to come out it. And people are just cautious about spending. Restaurants are struggling. Our multi-tenant properties are having to lower rents to keep people, but that doesn’t help them with their bottom line,” he said.

2012 looks like a “volatile year,” Black added. With the presidential election and the European debt crisis, “the financial markets are so unsettled, and now Iran threatening to stop the flow of oil. The price of gas is already higher, and the average household is having to budget tightly.”

Black, who works in real estate in Lake Norman and Cabarrus, said he sees the same problems everywhere.

“The only bright spot I see is the small leasing market, commercial spaces of 1,200 to 2,000 square feet,” he said. “People are getting out of the financial markets and investing in small businesses.”

Speedway Plumbing was a relatively new company that grew quickly with the boom in residential housing in Cabarrus County, according to a Concord real estate professional, who did not want to be identified.

Speedway Plumbing was the Cabarrus Chamber’s “Business of the Year” in 2003. But business for Speedway and other sub-contractors dried up just as quickly when the housing market crashed.

Speedway Plumbing owner Bryan Huneycutt did not return an email, and the message on the company phone said the business closed in 2011 “due to the economy.”