I
n a recent New York interview, Hessam Nadji, CEO of Marcus & Millichap, outlined how commercial real estate is shifting from a period of shock to cautious optimism. He explained that the market’s turbulence began in 2023, with a steep rise in interest rates—up to 500 basis points—making valuations volatile and prompting many investors to pause. As the tightening cycle eases, investors are re‑entering, drawn by a more favorable environment.

    Nadji emphasized that the easing is not a sign of economic collapse but rather a stabilizing job market. While government job revisions have been severe, the private sector shows resilience, and prices have adjusted over the past two and a half years. This creates attractive opportunities across several asset classes: multifamily, retail, office, warehousing, distribution, self‑storage, and senior housing. He projects a five‑year outlook with strong occupancy, healthy income, and potential price appreciation in these sectors.

    When asked about office space, Nadji noted that companies are now more conservative with long‑term leases, driven by hybrid work models and a push for efficiency. The result is a shrinking office footprint, yet daily traffic has rebounded to about 80 % of pre‑pandemic levels and continues to improve. He also pointed out that new construction in the office sector remains limited, so the market is dominated by older, less efficient buildings versus newer Class A properties, which differ significantly in performance.

    In summary, the commercial real estate market is transitioning from uncertainty to cautious optimism. Investors are re‑engaging as rates stabilize, and the sector offers diverse opportunities across multiple property types. Office space is adapting to new work patterns, focusing on efficiency, while other asset classes benefit from price adjustments and a stable job market.