What happened in 2012? What can we expect in 2013?

Well, again, it's that time of year to look back and assess 2012 in an attempt to predict what I believe may happen in 2013 As I look back to my article of January 2012, my prognostication for the 2012 year was, for the most part, fairly accurate. The leasing activity was steady and a lot of the inventory which previously had been stagnant on the market started to be absorbed. The properties about which I am referring were well-located with good infrastructure (i.e., height, loading). Their landlords were willing to attract tenants by offering below market lease rates along with tenant fit-outs. In addition, the landlords were offering a generous amount free rent, which clearly demonstrates what it took to get the empty space leased. The office market landlords, in particular, were offering packages that are hard not to present to prospective tenants. When a landlord offers six months free rent to a tenant who occupies over 5,000 s/f on a five-year lease, you need very deep pockets to compete. With all of this being said, it is an understatement to say that landlords are competing for deals. Private owners, for whom real estate is not their primary business, are at a disadvantage. The professional landlord knows what it takes to create the activity in the short term in order to fill their empty space and, as previously stated, they have the financial ability to get deals done. The sales market was not as brisk as the leasing market, although buildings in the 8,000 to 20,000 s/f range fared better than their larger counterparts. Additionally, as I mentioned in my January 2012 article, we would start to turn the corner and prices, I projected, were at the bottom. It is not to say, there are not individual cases, where circumstances dictate that a building be sold quickly. There are. Furthermore, looking back during this past year, we saw banks more willing to do short sales than to foreclose. I cannot remember during any recession where there were only a handful of foreclosed buildings available. Lenders took on a new approach with defaults, and were not willing to go through the foreclosure process. Instead, they chose to work with the mortgagors. The banks certainly have loosened their parameters and are starting to compete between themselves to finance deals. 2013 will continue to move in a positive direction. We will see more consistent activity and a lot more companies that have been sitting on the sidelines will start to look and take advantage of very attractive, low interest rates and aggressive lease deals still offered by landlords. Remember, sales were getting done, but the buyers were very prudent, not to mention cautious. Sellers, do not take my positive spin as a sign to raise prices. The buyers are still analyzing and in no hurry to get things done. Remember too that property appraisals are an important factor. With the weak market for the past three years, the comps required by bank appraisals still have a ways to catch up. Therefore, I am not expecting prices to start heading "north" in the near term. As I have said in the past, users, if you are thinking about it, do it, and do it in 2013. I'm expecting 2013 will see us heading into economic conditions that will be favorable for company expansions. For now, let's all be thankful that extended downturn we have witnessed is finally behind us. Stay tuned... Ralph Perna is an executive managing director at Newmark Grubb Knight Frank, Melville, N.Y.