Marcus & Millichap Believes That Apartments Are Leading Recovery In Commercial Real Estate (AMB, FR, TRNO, ESS, AVB, EQR, BXP, BPO, VNO, SPG, TCO)

Hessam Nadji of Marcus & Millichap talked on CNBC with Erin Burnett about the recovery in the commercial real estate sector. He said that there is some improvement in investor sentiment, which is reacting to the job loss bottoming and leveling off of vacancies. He added that it looks like that this is a relief rally and the worst is over. He added that he sees recovery only in the apartment sector. Mr. Nadji explained that apartments and hotels are usually the first to show improvement. These two sectors correlate tightly with economy, and the apartments sector showed a great increase in demand this year. His picks in that space are Essex Property Trust, Inc. ESS, AvalonBay Communities, Inc. AVB and Equity Residential EQR. The office sector, the retail sector and the industrial real estate sector tend to lag said Hessam Nadji. The industrial sector tends to move closely with the movement of goods, which are driven by the economic activity. He is the most concerned with the retail real estate sector, especially with small retailers. In the industrial space his picks are AMB Property Corporation AMB, First Industrial Realty Trust, Inc. FR and Terreno Realty Corporation TRNO. In the retail he likes Simon Property Group, Inc SPG and Taubman Centers, Inc. TCO. The office market has seen the worst, continued Mr. Nadji. He believes that demand is starting to recover, but he sees the problem with leases because they will be renewed at much lower rates. He thinks that it will going to take a year or two before we see the increase in revenue. In the office space investors should put Boston Properties, Inc. BXP, Brookfield Properties Corporation (USA) BPO and Vornado Realty Trust VNO on their radars. REITs had a great run, because they are the best operators in the space, said Hessam Nadji. They usually lead the market because of the occupancy increases, and they offer an attractive dividend yield.