'The hybrid work environment is a major concern,' says Marcus & Millichap CEO

Concerns about recent bank failures have led investors to watch the commercial real estate market. Small banks hold a relatively large share of commercial loans, and consecutive rate hikes by the Fed make it unlikely that those businesses will refinance given the high rate environment. Meanwhile, flexible work arrangements are also lending to declining occupancy rates among many businesses.

In an interview with Yahoo Finance's Rachelle Akuffo, Marcus & Millichap CEO Hessam Nadji said, "The hybrid work environment and the reduced footprint in office buildings is a major concern." Nadji says we're currently seeing the worst of the office decline, noting that, "in the next two to five years, you're going to see much more return to the office. It won't be pre-pandemic levels. I think there is a structural and permanent reduction of office space needs."

Watch our full conversation with Hessam Nadji here.

Key video moments:

00:00:05 The hybrid work environment

00:00:12 Return to the office outlook

Video transcript

- The hybrid work environment and the reduced footprint in office buildings is a major concern. I do believe we're seeing the worst of it. I think in the next two to five years, you're going to see much more return to the office. [INAUDIBLE] prepandemic levels. I think there is a structural and permanent reduction of office-space needs.