Commercial property foreclosures spike in January

Property lenders have often been willing to work with borrowers since the pandemic upended commercial real estate. Increasingly, their patience is running out. 

There were 635 U.S. commercial real estate foreclosures in January, up 17% from the previous month and roughly twice as many as in January 2023, according to a report from Attom. Those figures are based on the number of commercial properties with at least one foreclosure filing entered into Attom's data warehouse in a given month. 

Foreclosures hit a low in May 2020, as lenders struck deals to help owners navigate the initial shock of Covid. Those forbearance programs have mostly run out. Meanwhile, borrowers are grappling with higher interest rates, making refinancing difficult, and shifting work trends that have cratered demand for office buildings.

The increase was especially drastic in California, where foreclosures rose 72% in January from a month earlier and nearly tripled since January 2023.