SAN FRANCISCO—With REITs having outperformed the broader market in 2014 and now set to become the 11th standalone sector within the S&P indices next year, it's legitimate to question how real estate trusts will fare this year. In the view of Marcus & Millichap's Hessam Nadji, the sector will move from strength to strength during 2015.

“The underlying asset is what it's all about,” the GlobeSt.com Thought Leader said during a recent interview on Fox Business. “Commercial real estate in general has been doing very well, and the recovery is actually accelerating thanks to job numbers and very low interest rates. REITs are a reflection of the strength of that whole asset class.”

Chief strategy officer at MMI, Nadji told the Fox Business audience that while multifamily REITs were the first to recover because of the housing crisis, “they've really sustained their strength. There's so much demand coming from the young adult who is looking for an entry-level apartment unit, but more importantly from the professional adults—the thirty-somethings that are capturing a lot of professional services jobs—and the empty nesters who are selling their homes and choosing to rent a high-end apartment in an urban area.”

Asked to pick the strongest contenders in the REIT world, Nadji pointed to the relative strength of individual commercial real estate markets. The company produces an annual study that ranks metropolitan areas in terms of all major property types: retail, office, apartments. “If you look at those markets, you see that the job leaders across all different property types are really capturing the best rent growth prospects,” Nadji said. “And because of that, those REITs that have exposure in those metros tend to do well.”

Nadji also discussed the 2015 outlook and the prospect of rising interest rates. He said that although there was a concern over whether REIT performance would falter by comparison to the year just past, “if you look at the fundamentals, they point to another very strong year in 2015.”

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