Marcus & Millichap Chief Executive Office Hessam Nadji said he believes the hybrid work model is here to stay on a recent appearance on CNBC’s Squawk On The Street, GlobeSt.com reports. The executive also noted however that as the post-COVID-19 pandemic economy recovers, office demand should begin to increase 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 said on the show. “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 also said that the hybrid work model is sustainable, but likely not at the expense of commercial real estate office space. Once the economy is reconfigured, Nadji expects there to be more demand for new office 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,” Nadji said. He also noted 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 said that CRE owners have been responding quickly to partner with tenants in order to see what the future of work looks like. A lot of CRE owners and occupiers are putting a focus on team environments and collaborative space. Meanwhile, the “hoteling” concept, companies reserving desks for flex workers in an effort to minimize office space, has gained momentum across several markets, GlobeSt.com reports.
(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,” Nadji said.
Embracing the hoteling trend has caught on in many different sectors, from traditional law firms to large banks like HSBC. The latter announced earlier this that will forgo its plans to have executive offices in East London and instead require management, including its CEO, to “hot desk.”
When it comes to retail, Nadji said he’s seen a “massive reduction” of footprint and storage space, due to advancements in real-time deliveries, GlobeSt.com reports. The executive also stated that retail has begun to move back to experience and entertainment concepts, which are “coming back strong.”
Joe Dyton can be reached at email@example.com.