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Marcus & Millichap Managing Director Hessam Nadji on the outlook for commercial real estate and lending.
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-- on best commercial real estate development.
Contributed more than 260 billion dollars to GDP last year did you know that.
My next guest thinks the commercial real estate market is ready for a major recovery.
Has -- IG managing director of market.
Is all about resurgent advisory services joins me now from Fox Business explicit.
San Francisco pleasant has -- beautiful world since -- to see you.
Most up says it seems like 2011 really did strollers for the first time that true rebound.
And commercial -- Allstate what.
-- good afternoon great to be with you on the program again.
-- right 2011 was the first real recovery here for commercial real state it has to do we jobs even though the job numbers have been disappointing.
We added two point one million private sector jobs in 2011.
And that is the driver of the rebounding commercial real think demand and it's the most important indicator that we watch.
Let me ask you this you.
You look at confidence -- you look at it whether it's original we're -- the different places that we actually saw -- build.
Whether it was California or Texas or New -- but you also look.
At financing and that has been kind of the the the big problem with commercial bulletin is the financing a lot of small -- was telling us.
And our recent report that these smaller -- -- getting done because of tough financing.
So how do you adjust for that when you do -- analysis of the market overall.
That's another bright bright spot in the marketplace about a year ago financing was extremely difficult to obtain.
Really for the majority of real estate commercial real state and that has eased quite a bit in the quarterly survey of investors that we conduct.
Almost 60% of them said that financing has become more available.
We've seen commercial banks come back into the market place we've seen life insurance companies come back into the marketplace and and lend actively.
Because the fundamentals -- occupancies.
In pretty much all the sectors across the country are improving gradually but they are improving so lenders are becoming a little bit more confident.
Now the underwriting standards are still very tight.
So lenders are very cautious.
And the tertiary markets the real difficult locations that don't have a lot of economic recovery or drivers.
Yet are the ones that are still suffering from a tightness in financing.
Has some you know obviously be underwriters the banks themselves -- they're gonna be cautious and nervous I mean who can blame them at the same time.
What we're seeing now is the shift and that in the demographics of the country when it comes to renting vs owning a big.
Driver commercial was is -- apartment complexes were saying now that it -- it might be better to own cheaper to own for the lower income individual.
And to rent an apartment could that be a potential picked up.
For the commercial real estate market do you think.
-- within commercial real state surely you're right apartments.
As an investment category have been the star performer.
We've seen around on the man come back very strongly people have still been reluctant to buy homes because -- the for sale housing market hasn't quite bottom yet.
So we've seen apartment vacancies fully recover from the recession.
The other -- property types like retail or shopping centers office buildings and industrial warehouse buildings have also shown recovery but not nearly as much as apartments.
And the and the reason for that is exactly what you said that's the underlying demand for renting vs buying right now.
In the next 24 months as job growth starts to pick up which by the way -- investor sentiment.
Really does indicate that -- in a kind of a soft patch not another recession it as they read they -- economy picks up speed -- in the next week for 36 months.
We would expect to see some home buying -- four apartment owners and are not asking to be somewhat cautious about this notion that they're not gonna see renters become home wanna.
I think that will probably happening in smaller waves in the future but it will happen.
OK it's a fair or not the answer my question before really gotta -- gotta get -- your expect of this the really interesting names and here.
And here's what you gave doesn't want to show our viewers some of these -- because I think they're related to -- very intriguing SX.
Equity.
Camden Simon properties -- -- on -- on the properties ten or the outlets are actually Boston properties we note these so cut -- interest saying.
Mix of pics from you.
Couple up of all of these what are your two favorite.
It's.
Well I would it's very hard to pick two favorites and I have to say -- -- examples of top performers across the different Specter among real estate commercial real state department's retail office.
-- remember the retail segment has been extremely well rewarded by having seen -- 200 percent movement.
Since the bottom of the recession twice as much as the S&P 500.
So they're extremely well capitalized they're cutting edge operators.
And I would have to say of of the two.
Names that really come to mind Boston properties is one and the other Simon properties because they're really in these sectors.
That still have a lot of recovery -- ahead of them.
I had I had a failure as it goes to -- -- the biggest big names that we I cover in that group anyway as some.
Najib -- and all of -- research and advisory services good to -- -- again on the -- Great to be part of a --
