NOW just might be one of the best times to buy in the commercial real estate market

The prevailing wisdom is: "Do not try to time the market." Well, if I were a betting man, I would say NOW is the time to give that a try in the commercial real estate market. Unlike the stock market, which is affected by too many outside forces on a daily basis, the real estate market is more predictable. There are a few indicators that say we have reached "the bottom" in the commercial market outside of Manhattan. The availability of properties for sale or lease has reached a plateau. This factor, coupled with other factors, including interest rates and incentives, makes now a good time to seriously consider relocating and/or expanding your business (based purely on owner/user occupancy). To start with, there is no doubt in anyone's mind, interest rates are at the lowest level that I can ever remember. Recently, I received a quote from one of the top five banks presenting an interest rate of 3.47% with a 25-year schedule and a five-year balloon. True, banks are looking more carefully at the financial information, but for qualified buyers, the money is available. In addition, those users who do qualify, can, in some cases, obtain up to 90% of the project's cost including those allocated for renovations. Furthermore, if you meet the IRS' definition of a manufacturing company, tax-exempt financing can be arranged and, depending on the credit, the interest rates would be in the area of 2-3% with long-term fixed rates. Insurance companies will offer the most attractive terms where they will fix the rates of interest for up to 25 years, again depending on the credit of the company. The fact is, you may pay more in closing costs and a little higher in the rate of interest, but that long-term fixed rate of interest becomes very attractive and, in cases where financing over $5 million, it is well worth it. Regarding incentives, at the town, county and state levels, companies can arrange for a variety of incentive programs. The IDA programs offered by the various townships are a terrific starting point, offering real estate tax abatements that can be combined with the elimination of the mortgage recording tax and a sales tax exemption over a three-year period. This adds tremendous value to the overall project. Another item to keep in mind for those companies who move from Con Ed's electric grid to LIPA, can obtain (in most cases) an abatement of the electric rate; not from the incremental increase in usage, but from kilowatt one. For the towns and counties, the real estate tax abatement programs have been a vehicle for retaining and attracting expanding companies. However, in looking to the future, I believe the school districts will have to participate with the towns in these tax abatement programs. Obviously, companies need a compelling reason to expand and relocate. However, if your company has survived the previous and current retractions and your business has prospered due to the fallout of the competition within your industries, then the time is here and now. As a user, do not be too concerned that you may not be obtaining the best price for the property, but consider the intrinsic value of using the facility for your own company. Once again, I would like to mention to owner/user benefit. By far and without a trace of a doubt, owning and paying yourself rent over a long period of time, will certainly add value. All this being said, now is the time to go out and scan the marketplace. Opportunities are available for those ready, willing and able to proceed. Stay tuned.......... Ralph Perna is an executive managing director at Newmark Grubb Knight Frank, Melville, N.Y.