Aisle of cubicles at an office
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Jeremy Hobson: Now to the news this week here in this country, that the home improvement company Lowe's will close 20 under-performing stores. That's a perfect example of the effect the weak housing market is having on what's called the commercial real estate market. That includes things like apartment buildings, malls, office towers, and of course, big box stores like Lowe's.

Hessam Nadji watches the market for Marcus and Millichap real estate investment services, and he joins me now in the studio to discuss. Good morning.

Hessam Nadji: Good morning.

Hobson: You are a guy that watches the commercial real estate market all the time -- what keeps you up at night?

Nadji: The biggest risk is if we have more than a stagnation in the economy. I think we're going to dodge a recession, but if there's another shock that results in large volumes of job losses, we can see the occupancy levels start to go back down again. This is very unlikely; I think the worst of it is over -- but that is the biggest risk.

Hobson: But employment here in the U.S. is a bigger concern for you than say, the debt crisis in Europe?

Nadji: They're both important, because we are in a global economy and the debt crisis in Europe, if it's going through a contagion, could harm the recovery here in the U.S. But to me, the fundamentals of commercial real estate in the U.S. are the most important -- and that's driven by jobs.

Hobson: If you think about the sort of "era of malls," that we've had in the United States, when they were being built big time -- is that something that we're going to see going forward, or have we sort of changed our culture a little bit, and we're not going to see that so much anymore?

Nadji: Online sales are the fastest-growing category of retail sales in the U.S. And because of that, the use of brick-and-mortar shopping centers and other types of retail is being reinvented and challenged. It's going to take a while before property owners find new demand for the spaces that are being emptied.

Hobson: Are the office towers in cities like Nashville and Detroit -- are they filling up again, or do we still have a lot of empty floors?

Nadji: We still have a lot of empty floors. And even though in the last twelve months we've added close to 550,000 business service jobs, the demand for office space is going to trail the improvement in jobs because companies have a lot of excess space. It's going to take about two years to burn through that excess space before we see a true recovery in the office sector.

Hobson: Hessam Nadji, managing director at Marcus and Millichap real estate investment services. Thanks so much for coming in.

Nadji: Thank you, Jeremy.