New Demand Could Offset Drag from Hybrid Work
Marcus & Millichap CEO Hessam Nadji told CNBC hybrid work is sustainable, but as the economy reconfigures demand will increase for new space.
Hybrid work is here to stay, according to Marcus & Millichap CEO Hessam Nadji – but as the post-pandemic economy reinvents itself, we should expect new demand across asset classes to tick up in the short term.
“The economy is reshaping itself, and within the next 12 to 18 months all of that will create new demand, whether it’s for office space or industrial warehouses,” Nadji told CNBC’s Squawk On The Street. “Even retail is resurging – I’m talking about brick and mortar retail, not just retail in general. And, of course, housing is very hot.”
Nadji told CNBC hybrid work is sustainable, though on the flip side as the economy reconfigures he expects demand to increase for new space.
“The recovery magnitude is so big and the reinvention of the economy and the uses of real estate is also profound, offsetting some of the drag,” he said, noting that new business startups are at an all-time high, with 1.8 million applications filed in the last 12 months through May, a much larger margin than ever observed.
Nadji says property owners are already responding quickly to partner with tenants to determine what the future of work looks like. Many owners and occupiers are emphasizing team environments and collaborative spaces, and the concept of hoteling is taking off across a variety of markets. Workers want to be “able to use office space in a generic fashion when you’re in the office but not necessarily consuming that space when you’re on the virtual or hybrid side,” he said. The trend is being embraced by everyone from traditional white-shoe law firms to banking giants like HSBC, which announced earlier this year that it would scrap its executive offices in East London and require managers (including the CEO) to hot desk.
And on the retail front, Nadji is observing a “massive reduction” of footprint and storage space thanks to advancements in real time deliveries. He also observed that retail is now pivoting back to experience and entertainment concepts, which are “coming back strong.”