John Magnani: Where are we now, where are we headed and where are the opportunities?

Real estate customers and investors constantly ask brokers where the market is and when it will improve. As an experienced NYC Metro broker, I believe that the NYC-Long Island market has been trending at the bottom but is now showing classic improvement indicators. Investors who wanted a "steal instead of a deal" are willing to accept lower CAP rate acquisitions. Income-expense ratios have become paramount in any proposed investment transaction. The supply-demand dynamic nudges users to make transactions now, not later. The stock of potential short-sale properties has diminished as banks sell off notes rather than suffer the REO process. Blocks of office space are being leased by landlords willing to trade free time, discounted lease rates, and minor improvements on buildouts to lock in 5-10 year leases. Tenants attempting to "time the market" have negotiated longer leases with smaller escalations to maximize their leverage before the advantage again shifts to the landlord. These market indicators point to a slowly improving trend with real growth by spring 2012. Pent up demand for capital to invest in quality commercial real estate will surge once the perceived bottom of the market has been accepted. Smart investors and users are transacting now. John Magnani is the managing director, commercial division at Daniel Gale Sotheby's International Realty, Manhasset, N.Y.