New York commercial real estate (New Year's) resolutions

Oprah Winfrey optimistically proclaimed: "Cheers to the New Year and another chance for us to get it right." As 2011 came to an end, naturally many of us wanted to reflect on the events of the past year and, even more importantly, look forward to the coming year. New Year's Eve has become synonymous with the infamous New Year's Resolutions. We will look at our bad habits and our botched ambitions of 2011 and resolve to do better in 2012. While Oprah was most likely referring to the classic personal promises we vow to ourselves as one year ends and another begins, I started contemplating my own resolutions. I immediately realized that my list is distinctly two-fold this year: On one hand I would really like to shed those extra 10 pounds, which would make my wife happy; however I am also praying for an economic revival and a booming real estate market. How can we take the customary New Year's resolutions of vowing to eat healthy and go to the gym and apply the same philosophy of resolve to a larger scale? What resolutions can we set that will allow us to prosper in business and financially? After all, if the economy remains stagnant we can't afford that gym membership, which will undoubtedly make my wife unhappy. It seems as if 2011 can be appropriately characterized as a year of economic and political turbulence. Economic instability has been heightened by the European debt crisis and a mercurial stock market. The S&P downgraded the U.S. credit rating for the very first time in our nation's history due to the domestic political volatility in Washington. Moreover, global political upheavals in countries such as Egypt, Libya, Serbia, Yemen and Tunisia have increased uncertainty. While many areas of business were directly affected by the economic and political turmoil of 2011, the market conditions in real estate were severely impacted. The commercial real estate market is particularly sensitive to unpredictability, which is why owners and investors have been frustrated by feelings of paralysis. Investors felt trapped on the sidelines, hesitant about their next move. Many of these owners overpaid for properties during the height of the real estate boom. 2011 left them in a position where they would have liked to sell these investments, however the marketplace did not reflect the prices they were anticipating. Additionally, as leases signed in the mid-2000s came due, many owners were unable to secure comparable rental rates. Landlords were forced to choose between vacancy or rent reductions of 33%. As new tenants emerged, landlords became timid on many fronts and the credibility of tenants became a prime focus in leasing their properties. These factors propelled a plunge in investment sales by roughly 60% from its high in 2008. As we glance back in our rearview mirror, 2011 undeniably put the real estate market - and the entire country - to the test of sustainability. As we look ahead to 2012 and consider our New Year's Resolutions, there is definitely evidence of economic turnaround and an increased sense of security. Real estate owners are comforted in knowing that the Federal Reserve has assured low interest rates for the next 18 months and banks are more inclined to lend. Retail tenants are finally securing profits, prompting them to expand to additional locations. This flux in the market provides the motivation and confidence that potential real estate owners need in order to entertain new investment opportunities. The moral of the story is simple: Despite the uncertainty of 2011, the underlying economy of the U.S. is strong and the real estate market is headed in an upward direction. As investors and business owners ponder their resolutions for 2012, do so with tenacity and courage. We at American Investment Properties are seasoned professionals who are committed to bringing our clients the best and most timely market analysis. We understand that 2012 will have its own set of political and economic uncertainties and we are resolved to help our clients navigate through the real estate marketplace. Like many of the retailers today, we are seeing a strengthening in the real estate market and are determined to grow our business and continue to be Long Island's premier commercial brokerage firm. Once again, we will be keenly focused on "Cheers to the New Year and another chance for us to get it right." For additional information about buying, selling or leasing commercial real estate on Long Island, please contact us at (516) 393-2300 or visit us at www.aiprops.com. Ron Koenigsberg is the president and Marc Flynn is manager of commercial Investments at American Investment Properties, Garden City, N.Y.