The president and CEO of a top commercial real estate investment firm predicts that there will be some distressed buying in the market, but not enough to significantly impact it like previous economic crises. In an interview with Connect Media’s CEO Daniel Ceniceros, Marcus & Millichap’s Hessam Nadji stated that he does not believe this will be the catalyst for major changes in the market.
Nadji acknowledged a split between office properties and other asset classes when it comes to loan performance and fundamentals. He noted that older or outdated office spaces are facing more challenges compared to Class A properties which continue to attract tenants.
However, Nadji also pointed out that his company is prepared for any potential distressed transactions through its recent acquisition of Mission Capital Advisors. They have also established an auction division in anticipation of auctions becoming more prevalent in the future.
Despite these preparations, Nadji believes that what will truly redefine the marketplace is a realignment of price expectations due to factors such as continued economic stability and moderate growth or even mild recession rather than a significant downturn. This pricing reset may take time but ultimately depends on various factors including interest rates and seller motivations.
Speaking about interest rates specifically, Nadji mentioned how their sudden increase has caused some disruption but should not have as much impact once they return back to normal levels over time. However, he expects their effects on valuation may become more apparent within 12 months from now as high interest rates ripple through the economy gradually.
