Long Island commercial real estate Q&A with Koenigsberg

Q: Is the L.I. commercial real estate market as bad as the stock market? A: Unlike the stock market, real estate is a solid investment. The cash-flow of income producing properties is not directly impacted by economic conditions. Owning real property as opposed to stock ensures a solid stream of income. With the stock market, fluctuations in value are unpredictable. On L.I., a property's value increases and decreases as a result of specific variables. These variables are often foreseen and preventable making real estate on L.I. a profitable and steady investment. Q: What advice do you have for local buyers who are looking to purchase out of state? A: When owning a property out of state the issue of management often arises. Tasks such as the property's upkeep, repairs and renting when a vacancy occurs often require on-site attention. Triple net properties allocate all of the properties' responsibility to the tenants. Triple net properties are the best option for local investors looking to purchase out of state. Q: How are you able to sell properties at 6% capitalization rates in this market? A: At American Investment Properties, we are able to accomplish these sales by working with sellers to achieve 6 and 7% capitalization rates. By working with sellers on an exclusive basis, we are able to reach the highest volume of potential buyers ensuring maximum exposure. Our marketing techniques consistently produce positive results for our clients. Q: Are office buildings decreasing in value? A: Right now, office buildings are being sold at attractive prices and are an increasingly good investment for buyers who are looking to purchase properties with upside. Office vacancy rates on L.I. are increasing. The increase in vacancy rate equates to a lower net income, which affected the price per s/f of a property. Understanding these factors is crucial in deciding a building's worth. The current market is presenting a great opportunity for buyers; office buildings are a great value because of the reduced price per s/f. Q: Are local shopping centers easier to maintain than mixed-use properties? A: Typically on L.I., shopping center landlords are only responsible for a building's taxes, insurance, roof, structure, and some common area maintenance. Mixed-use properties with apartment or office tenants present more responsibility to the landlord. On average, office and apartment leases do not require the tenant to contribute toward a building's insurance and structural costs. Q: How are retail vacancy rates on L.I.? A: The average vacancy rate at neighborhood and community malls rose to 8.2%, up from 7.3% a year earlier. I believe this is the highest level L.I. has seen since 1995. Several interrelated factors are contributing to these increasing vacancy rates. Retail sales and demand for shopping center space are affected by rising unemployment, increasing food costs, and declining home values. Ron Koenigsberg is the president of American Investment Properties, Garden City, N.Y.