Experts weigh in on market state at CHIP seminar.

Real estate investment has finally gone mainstream, according to one of New York City's leading sales brokers.

"Twenty years ago, real estate investors were the pioneers and risk-takers. Today, real estate investment has become a favorite relative of stocks and bonds because demand is off the charts, and availability of debt and equity capital is unprecedented," said Robert A. Knakal, chairman of Massey Knakal Realty Services.

Knakal's remarks were made during his keynote address to 200 guests at a recent symposium, "Buying and Selling Real Estate in New York: An Insider's Guide--What's Ahead in Real Estate Markets," co-sponsored by the Community Housing Improvement Program (CHIP) and Washington Mutual Bank. James Wacht, president of Sierra Realty Corp., and one of several featured speakers at the symposium, agreed with Knakal's assessment. "Twenty years ago, you didn't see the Goldman Sachs and investment banks in this business. Now, everyone likes real estate and appreciates the consistency of the return it generates. The performance of stocks and bonds hasn't been particularly terrific over the last six or seven years, which has increased demand and asset value of real estate, particularly in the rent-regulated market," Wacht said.

The symposium featured an industry Who's Who of speakers, experts in property ownership and management, sales brokerage, banking, institutional investment, and legal and accounting services. They provided cutting-edge analysis on a wide array of issues, such as directions in the marketplace; prospects for appreciation and income; financing options; ownership structures, and tax considerations.

"Our members came away with practical information and advice they could immediately implement in their businesses," said CHIP vice chairman Paul Brensilber.

While investment in the rental sector is strong, Knakal gave the development market mixed reviews. "There has been a reduction in the pricing of land in secondary and tertiary locations deep in the boroughs. However, the cost of land in prime locations, for example, midtown Manhattan and anything on the water or near parks, is still going through the roof," he said.

But the major factor that will determine which direction the real estate industry is headed over the coming quarters, according to Knakal, is the consumer condominium market.

"Some in the conversion end of the business believe condo prices will ease by 10-15% max, and there are others in the industry who think prices will be off by 35%," he said.

" If the latter happens, it's going to be interesting to see how the market reacts. Developers who paid top dollar for land with the intent to build condos can't just retread and do rentals instead. The banks will end up owning the properties. This, more than anything, will be the key thing to watch," Knakal told the attentive audience.

A number of other guest speakers offered valuable advice and information while weighing in on their areas of expertise.

Peter Spies, managing director, Goldman Sachs & Co. said, "Institutional investors view the rent stabilized market as a highly profitable business. Make your property attractive by providing complete disclosure; detailed, user-friendly information and computerized rent rolls for easy analysis."

David Levy, CEO, of Nathan Katz Realty: commented, "I recommend that property owners create a Website with detailed systems data, including things like square footage, rent rolls, lease reviews, and records of appliance replacement, renovations and boiler and roof maintenance."

Craig Ingber, Esq., partner, Belkin Burden Wenig & Goldman LLP: "Owners who do not meet LLC publishing requirements could potentially face bitter defeat in legal disputes with tenants who will use this against them." Alan P. Miller, director, Eastern Consolidated Properties, Inc.: "Know everything about the market. Follow up with potential buyers and keep the highest bidders engaged until the property is sold."

Marc Wieder, accounting/audit partner, Anchin, Block & Anchin LLP: "Owners who fail to make the required election as a real estate professional under Section 469 of the Internal Revenue Code could face damaging tax implications."

Ofer Yardeni, managing partner, Stonehenge Partners, Inc.: "My business plan is no great secret. It focuses on multi-family buildings located near major subway stations, preferably family owned, and only with studio and one- and two-bed apartments."

Martin J. Brady, senior VP/regional sales manager, Multi-Family Lending Division of Washington Mutual: "Preparation is tantamount to quick execution. Make sure your rents are registered and your violations are cleared."

Michael Stoler served as moderator.