Where is the sale's gap and how do we get past it?

It's déja vu all over again. Fast track back to '80s when there was a pronounced acceleration in real estate values. Fast forward to today where there exists many similarities in the spread between the sellers/owners' expected sales price for their property and what prospective buyers are willing to spend. The only difference - and it is significant - is that today, there is a lack of available quality buildings for sale creating different market dynamics. In Manhattan and the boroughs, industrial properties are becoming increasingly more difficult to locate. Understanding these conditions is important for sellers and buyers who are serious about consummating a deal. Let's start with the buyers. If they are already somewhat sophisticated, they know that market conditions can't be overlooked any more than carefully screening a property in terms of its physical condition and financial performance. In my prognostication, which is based upon the current state of the economy and the rise in price of all petroleum-based products, I was anticipating more buildings on the selling block than currently exists. As for sellers, they can't be faulted for leveraging a low supply-high demand scenario. However, where the "gap" persists is when sellers hold on to their artificially accelerated price structures (often amplified by some over zealous brokers) and prospective purchasers, while seriously in the market for a property, become too cautious based on current economic conditions, caused largely by a "sky is falling mentality" being conveyed by the mainstream media on a daily basis. So, what we are seeing is this "gap" fueling a period of stagnation. While there are some industrial buildings being sold, these sales are occurring only after a property has been stagnating on the market for a lengthy period. Often, the sale only happens after one or more contracts have fallen through as a result of prospective buyers' uneasiness about the current real estate market. I think the sellers may have to blink first in this stand-off. I'm not minimizing the importance of establishing investment goals for your properties. Clearly though when you see the largest institutional investors scrambling to adjust their portfolios, it should be a sign that something may have to give. The most telling sign might just be that the banks are appraising industrial properties at values much lower than sellers are asking, in addition to assuming extremely conservative lending positions. So going forward, here are my recommendations to buyers and sellers who want to make a deal: Buyers - Do your homework. Take stock of the available inventory. Then review comparative analyses on each property to determine which one(s) best meet your needs. Be cognizant of economic conditions and market indices, but don't overreact. Markets are cyclical: they go up and they go down. If your business requires the expansion, forget market timing. Remember, you make money in your business, the ownership is an additional plus. Sellers - Even if your property has minimal competition, don't expect today's buyers to fold just because their choices are limited. They are still going to want a realistic price that reflects the broader economic picture. Be prepared to market your property strategically and aggressively. Don't take the catbird's seat position and think you have it made. You don't. Negotiations are part of the game and become even more important during challenging economic periods. Both buyers and sellers should also avoid trying to navigate today's market alone. The right professionals really earn their fees in a market wrought with conflicting conditions: low supply, high demand, serious but jittery buyers, tight lending, big name mortgage holders requiring major bail-outs, etc. Moreover, they can offer well-considered advice on a particular property: how best to price it for sale and/or whether or not it is priced fairly given the current market. Ralph Perna is the executive managing director for Newmark Knight Frank, Melville, N.Y.