Real estate answers you need to know

A question and answer session with Ron Koenigsberg, president of American Investment Properties. Q: How has the role of hard money lenders in the commercial real estate market become more essential? A: Hedge funds have been quick to respond to the financing drought. Today as many as 140 hedge funds specializing in distressed assets or fixed-income securities have now begun to provide commercial real estate lending. More hedge funds are looking for opportunities in commercial real estate because the sector offers higher returns relative to the risk they are taking. Default rates on commercial mortgages are hovering around levels of less than 1%. Q: How are vacancies affecting cap rates? A: On Long Island, commercial real estate has been experiencing an increase in vacancy rates. The market reacts to this by projecting a leasing schedule for the time it takes to occupy the property, which directly affects the NOI and increases the cap rate. Q: How do you think a new president coming into office will affect the commercial real estate market? A: Commercial real estate should benefit as interest rates remain low in the short term. Historically, a downturn in the economy triggers a party change which often elicits a candidate with the best economic plan. Remember the phrase "it's the economy, stupid." It was the staple of Bill Clinton's 1992 campaign to show that republican incumbent George H.W. Bush hadn't paid enough attention to the economy which had just gone through a recession. Industry leaders and investors are looking forward to new policies and taxes change under a new president. Q: Why should I invest in Long Island as opposed to New York City? A: Cap rates are higher on Long Island making it a better return on your investment. Manhattan has a larger and more international market of investors which makes competition more intense.   Q: Are there any bank foreclosures in commercial real estate? A: Unlike the residential market, commercial properties on Long Island have yet to feel the effects of the economy. We haven't seen any foreclosures at all in this market cycle yet nor do I anticipate any in the near future. Q: Is now a good time to be buying commercial properties? A: It's a great time to invest in commercial real estate on Long Island. A strong supply of high quality properties are available making it the optimal time purchase a property on Long Island. Q: Is there any new construction going on in commercial real estate now? A: Two very exciting new projects have been proposed aimed at revitalizing Long Island's communities; the Lighthouse and Glen Isle projects are expected to bring economic growth to Glen Cove and Uniondale. These are definitely the two major projects to follow. American Investment Properties specializes in the sale of office buildings, shopping centers, strip centers and triple net properties and has earned a reputation for being one of the most successful brokerage firms on Long Island. Ron Koenigsberg is the president of American Investment Properties, Garden City, N.Y.