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Hessam Nadji on Commercial Real Estate: Likes Dallas (Audio) · Bloomberg Intelligence

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  Speaker 1: Broadcasting live to New York, Bloomberg eleventh, Rio to Washington,
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  Speaker 1: d C. Bloomberg to Boston, Bloomberg Well unders to San Francisco,
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  Speaker 1: and around the globe the Bloomberg Radio plus Jappen Bloomberg
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  Speaker 1: got gone. This is taking stock commercial real estate. Where
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  Speaker 1: is this very important market heading. I'm Kathleen HAZELNG with
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  Speaker 1: PIM Fox. We're gonna be speaking to the president and
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  Speaker 1: CEO of Marcus and Miller Champions based in Encino, California,
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  Speaker 1: for the largest brokerage firm in the country that specializes
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  Speaker 1: in commercial real estate, and they see steady job growth
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  Speaker 1: creating demand for both housing and commercial space. Pim and
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  Speaker 1: I want to know a little bit more about the
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  Speaker 1: choices that people make when they decide where to locate,
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  Speaker 1: for example, urban centers, close knit communities, maybe over suburbs.
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  Speaker 1: Will find out more, but right now, let's find out
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  Speaker 1: all the business news from Charlie Pellett and the Bloomberg News.
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  Speaker 1: All right, thank you very much, PIM, thank you, Kathleen,
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  Speaker 1: five hundred index up fifteen points, a gain of eight
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  Speaker 1: surging today after its earnings beat estimates. Supply Materials up
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  Speaker 1: dollars and fifty nine cents. Michael O'Rourke is chief markets
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  Speaker 1: out of just A Jones trading. On Bloomberg Television today,
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  Speaker 1: he said, we may be looking at the start of
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  Speaker 1: a bear market, and that's because of a lack of
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  Speaker 1: new highs about three and a half percent from the
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  Speaker 1: from the all time higher registered a year ago. And
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  Speaker 1: you know time and price are key things in the
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  Speaker 1: stock market, so what's working for the market right now
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  Speaker 1: is prices held up. Obviously times working against us, and
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  Speaker 1: what we have is a negative fundamental backdrop and of
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  Speaker 1: course fed tightening and some decelerating data in the economy
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  Speaker 1: that's keeping the market from breaking out. So the next
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  Speaker 1: six months or so I think are going to be
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  Speaker 1: pivotal because if you if you don't actively make that
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  Speaker 1: new high, it becomes harder and harder as time goes on.
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  Speaker 1: And gold down a dollar now a drop of point
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  Speaker 1: one percent to thirty two on Wall Street. Now, let's
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  Speaker 1: you from the Bloomberg news room, and Mark Crumpton. Three
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  Speaker 1: sites officials who were not authorized to speak about the
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  Speaker 1: ongoing investigation. The passenger manifest was leaked online and has
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  Speaker 1: not been officially verified by egypt Are. Flight eight oh
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  Speaker 1: four was carrying sixty six people from Paris to Cairo Thursday,
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  Speaker 1: when it's believed to have crashed. Officials say some wreckage
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  Speaker 1: has been found, including human remains. Family members of those
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  Speaker 1: who were on board a missing egypt Air flight gathered
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  Speaker 1: in the Cairo Mosque today to pray for the victims,
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  Speaker 1: many breaking into tears as they were in prayer. One
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  Speaker 1: man with four relatives on the plane says it's very
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  Speaker 1: holding out hope their loved ones might still be alive.
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  Speaker 1: Egyptian officials say it is not likely there are any
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  Speaker 1: survivors Amy Morris, Bloomberg Radio Washington with or without symptoms.
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  Speaker 1: The Zico virus is linked to birth defects. That warning
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  Speaker 1: From the Bloomberg news Room by Mark Crumpton. Charlie, and
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  Speaker 1: we thank you in this headline to pass along. Mexico
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  Speaker 1: says l Chapo Guzman's extradition has been approved. SMP five
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  Speaker 1: hundred index up fourteen points as we recap now the
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  Speaker 1: SMP of two thousand fifty four, a gain of seven
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  Speaker 1: tenths of one percent. I'm Charlie Pellaton. That's a Bloomberg
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  Speaker 1: business flash. You're listening to taking stock with pin Box
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  Speaker 1: and Kathleen News on Broomberg Radio. A new report by
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  Speaker 1: the Real Estate Board of New York There's spring retail
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  Speaker 1: report says that discounting is a theme, at least in
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  Speaker 1: cities such as New York. While commercial real estate remains
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  Speaker 1: fundamentally strong, there is a slowdown that is occurring both
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  Speaker 1: at the national and in global marketplaces. Let's find out
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  Speaker 1: more from Hassan Naji. He is the president and the
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  Speaker 1: chief executive of Marcus Millichap based in Encino, California. Hassan,
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  Speaker 1: thank you very much for being with us. Tell us
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  Speaker 1: your view of the commercial real estate market today. Happy
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  Speaker 1: to do it. Thanks for having me on the program.
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  Speaker 1: Always good to be talking with you, PIM. The environment
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  Speaker 1: for commercial real estate has been ideal in the in
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  Speaker 1: the fact that we have steady job creation, but not
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  Speaker 1: at a rate that is causing a lot of inflation,
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  Speaker 1: which is given the feed a lot of flexibility. So
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  Speaker 1: you have a combination of improving fundamentals on the supply
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  Speaker 1: and demand of commercial real estate. Plenty of demand coming
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  Speaker 1: in for office space, for apartments, for retail space, and
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  Speaker 1: so on, occupying more and more space and paying higher
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  Speaker 1: rents at a time when the valuations have been supported
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  Speaker 1: by low interest rates, and so the yield of commercial
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  Speaker 1: real estate has been compelling for the last several years
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  Speaker 1: and remains very compelling in the average of the five
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  Speaker 1: or seven percent nationally across the whole spectrum of commercial
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  Speaker 1: real estate at a time of as you know, a
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  Speaker 1: lot of our altility in the stock market and uncertainty elsewhere.
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  Speaker 1: Some how much has the rising home prices in some
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  Speaker 1: parts of California, as you well know, a large part
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  Speaker 1: of the populationship priced out of home buying if you
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  Speaker 1: look at their their income and debt to income ratios, etcetera.
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  Speaker 1: More people renting more apartment buildings being built. How's that
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  Speaker 1: played out for commercial real estate. It's been a very
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  Speaker 1: favorable trend for apartments in that rental demand has been
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  Speaker 1: at record levels for now several years, partially because of
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  Speaker 1: the affordability that you're speaking to, and partially because of
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  Speaker 1: consumers preference. You know, coming out of the financial crisis
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  Speaker 1: and the severity of the housing crisis that we had
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  Speaker 1: in two thousand and eight two thousand and nine, a
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  Speaker 1: lot of people have a whole different view in terms
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  Speaker 1: of looking at at a primary residence as an investment,
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  Speaker 1: and so there has been a lot more caution among
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  Speaker 1: especially among first time homebuyers, UH, the thirty and the
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  Speaker 1: young forty somethings that would have normally bought a home
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  Speaker 1: at that particular stage of their lives that are now
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  Speaker 1: choosing to rent. And the apartment industry has been very
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  Speaker 1: quick to respond to that extra demand by UH constructing
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  Speaker 1: and designing the kind of product that the thirty something
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  Speaker 1: really prefers, and the empty nester that's now selling a
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  Speaker 1: home and UM preferring to rent in an urban environment
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  Speaker 1: is beginning to show. So it's it's been a combination
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  Speaker 1: of both the affordability issue and only a consumer preference
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  Speaker 1: towards renting. I wonder if you could pick up on
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  Speaker 1: that has some and US speak a little bit more
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  Speaker 1: about this trend of people looking to live in urban
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  Speaker 1: areas and how that is creating a tighter bond between
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  Speaker 1: residential and commercial real estate them It's a very important
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  Speaker 1: trend in that we really have observed over the last
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  Speaker 1: twenty years the revitalization of so many downtown areas urban
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  Speaker 1: areas beyond just creating a twenty four hour environment where
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  Speaker 1: people want to work and live, it's become more than that.
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  Speaker 1: It is now uh, really much more of a series
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  Speaker 1: of amenities, both cultural and transportation oriented amenities and access
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  Speaker 1: to different kinds of retail acts, different kinds of services
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  Speaker 1: that have really free sprung back into urban areas that
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  Speaker 1: we really hadn't seen for a long long time since
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  Speaker 1: the suburban growth dominated basically the death nition of of
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  Speaker 1: US US growth over many decades. This revitalization has created
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  Speaker 1: the need for mixed use product when it comes to
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  Speaker 1: real estate, So you're seeing a lot of residential being
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  Speaker 1: built along with retail, along with um the kinds of
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  Speaker 1: services that you would need in order to basically have
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  Speaker 1: a safe, contained population within an urban area. The biggest
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  Speaker 1: challenge is the education system. So when you're talking about
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  Speaker 1: young adults, typically in their thirties, they're waiting longer to
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  Speaker 1: get married, and those that are getting married or coupling
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  Speaker 1: are waiting longer to have kids. So they're staying in
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  Speaker 1: these basically revitalized downtown areas and really enjoying it. But
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  Speaker 1: when it comes time to start a family, there is
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  Speaker 1: still a major disadvantage in the urban areas when you
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  Speaker 1: talk about schooling and the cost of private school versus
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  Speaker 1: the quality of public schools. And that's where we're still
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  Speaker 1: seeing a young families begin to move into the suburban area.
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  Speaker 1: And if you can even afford a them in one
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  Speaker 1: of these areas, a lot of your kids. The prices
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  Speaker 1: have gone up so much, right, But quick final question,
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  Speaker 1: where are this? Where's this? A couple of sweet spots
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  Speaker 1: for people who want to invest in commercial real estate.
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  Speaker 1: You've got about twenty seconds. Great. I would look at
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  Speaker 1: Dallas because, unlike Houston, it's still adding a lot of jobs.
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  Speaker 1: I would look at Atlanta and Phoenix as a recovery
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  Speaker 1: markets from the lower risk uh basically lower yield but
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  Speaker 1: lower risk markets the San Francisco Bay Area, Los Angeles,
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  Speaker 1: New York and and the Boston area. San Francisco and
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  Speaker 1: New York price down. I don't think they are because
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  Speaker 1: their supply constrained and the yields are low for a reason. Okay, well,
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  Speaker 1: you're giving us lots of interesting ideas as I'm Nagi,
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  Speaker 1: thank you so much for joining us today, President and
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  Speaker 1: CEO of Marcus and millichap uh. They are the largest
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  Speaker 1: brokerage firm specializing in commercial real estate. I'm Kathleen Hazel
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  Speaker 1: and pim Fox taking Stock on bloom Brig Radio. Bloomberg
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