Marcus & Millichap's Hessam NadjiLOS ANGELES—Against a backdrop of global volatility, commercial real estate has offered a stable alternative for investors both domestic and offshore. Among the voices in support of continuing to see the sector as a bulwark is Marcus & Millichap’s Hessam Nadji, who told a Bloomberg Markets interviewer recently that CRE remains a compelling investment option.

“You have to look at the fundamentals,” said the GlobeSt.com Thought Leader, senior EVP with MMI. Commercial real estate, Nadji said, has “really become a choice for investors because of fundamentals that have improved significantly pretty much across the board and continue to improve.”

For one thing, he told the Bloomberg TV audience, there’s been a lack of overbuilding, “which is usually a problem in the industry. We tend to overbuild when the economy gets overheated. That’s not the case in this cycle, with the exception of a few pockets.”

Most importantly, there’s the yield profile for commercial properties, “even with the potential of an economic slowdown going into 2016 or 2017,” said Nadji. A combination of 5% to 7% yields “at a time of very low interest rates,” hard assets and a future inflation hedge compare favorably “versus the volatility you’re seeing in other investment choices right now—that’s what makes commercial real estate so appealing in 2016.”

Nadji drew a distinction between investment capital and development capital. “Across the investment spectrum, the vast majority of investors and players in commercial real estate are private high net worth individuals; they’re very active and have been active for many years,” he said. “Many of them are cycling through assets, selling those that have appreciated and investing in those that are considered value-add with upside in terms of improving the property, raising rents and so on. But from a development perspective, that’s where capital becomes a lot more cautious, and that’s a good thing, because capital becoming more cautious on the development side reduces the risk of oversupply.

“That’s what you want to see in the marketplace,” he added. “You want to see the balance that we’ve enjoyed for the past four of five years continue on, and that’s where the industry has changed quite a bit in the past couple of cycles.”

Nadji also addressed the question of whether recent pricing declines in some key gateway markets, as reflected in Bloomberg data, point to a coming correction. For the full video, click here. For all coverage of Marcus & Millichap on GlobeSt.com, including columns and insights from Hessam Nadji, click here.