Doubt in the marketplace? Judging from Q1 reports, we've definitely transitioned into better conditions

Make no mistake, the activity level in commercial real estate has picked up. Both potential purchasers and those looking to lease are seeking new opportunities. Additionally, judging from Q1 reports, we've definitely transitioned into better market conditions. From Manhattan, where office leasing saw an up tick, to Long Island which experienced more stable conditions in office vacancies and rents, there are signs of improvement. My discussions with business owners in diverse industries also suggest a more positive situation with 75-80% experiencing an increase in business. Still, with that said, there remains a lot of doubt in the marketplace. Longer Processes, Uncertain Buyers and Tenants Completing a transaction is as difficult, if not more difficult than before, and the process is lengthier than previously. Buyers and tenants are only partially convinced that all is well. Who can blame them? At best, the signals of market stability are vague. While the office market seems to be gaining, the industrial market is not faring as well. On Long Island, the first quarter of 2010 saw a slight increase in vacancy rates from 4.6% to 4.9% and the fifth consecutive quarter of negative net absorption. Average rents dropped from $9.28 per square foot to $8.75 per s/f in the fourth quarter of 2009 and have remained down 6.5% from a year ago. Industrial rents on Long Island are now at their lowest point in over four years. Washington and Albany aren't doing anything to brighten our outlook either. Instead, they're placing further burdens on use. Investors, employers and individuals in certain tax brackets are anticipating additional financial burdens stemming from healthcare reform, higher taxes, transfer taxes and the fiscal crises at both the federal and state levels. Municipalities and school districts across our region are facing the wrath of residents reeling under high property taxes. All of these factors are converging to sustain fear in the market and a resistance to invest or expand with the purchase or lease of new facilities. Waiting for the Best Deals Are deals being done? Yes, but only at a real comfort level to buyers and tenants. They are seeking assurance that they have made the best deal and that prices are no longer falling-which buyers are waiting for. Construction financing has returned to the market. Additionally, many banks are taking a position of not foreclosing on owner-occupied properties, relieving them of the added burden of maintaining the property. However, they have yet to choose the path of workouts with many owners. In view of persisting tight credit and shaky market conditions, some commercial real estate investors are electing to refurbish properties in their current portfolio, rather than pursue new properties. Buildings, offering space at $90 to $100 per s/f, are still sitting on the market, even in prime areas. The exceptions are buildings that offer special features or an opportunity for a company to consolidate by acquiring other companies. Who can blame companies from hesitating to make a move with so many unknowns? We're all starting to wonder when the next shoe will drop. What's Ahead? With the prevailing doubt in the marketplace, don't expect things to return to pre-recession conditions for a some time. This market's rebound will be a slow process. There are still a lot of open wounds to heal. But, some buyers and tenants, experiencing a rebound in their businesses, will start making deals. They'll move much slower, and will be a lot more cautious in scrutinizing terms, making sure all of the i's are dotted and t's are crossed before they finalize anything. On the brokerage side, we need to summon up all of our patience and, while being realistic, hang on to a little optimism that better days are ahead. Ralph Perna is an executive managing director at Newmark Knight Frank, Melville, N.Y.