Multifamily and Retail Set to Rebound

Job growth and moderate economic expansion may make 2011 the year to get back into commercial real estate according to Hessam Nadji, managing director of research and advisory services at Marcus & Millichap.

In a Dec. 15 interview on CNBC’s “Squawk Box,” Nadji said apartments are poised for strong growth due to pent up demand, a result of the approximately 2 million young adults who are moving out of their parents’ homes with newfound confidence in the job market. Although he is most optimistic about multifamily—more optimistic than a recent National Association of Realtors report—he thinks retail could be the “dark horse” due to stronger than expected sales.

Alternative yields are 480 basis points off commercial real estate, and the spread between capitalization rates and interest rates is at a historic high. Both factors make it “a pretty compelling time to come back in," Nadji concludes.