Associates Breakfast With Sam Zell of Equity Group Investments
March 18, 2010
Santa Monica
"Reports of the demise of the real estate industry are greatly exaggerated," declared Sam Zell. And with that, the self-described "professional risk-taker" let fly with hard-hitting opinions on everything from gridlock in D.C. to the future of newspapers.
Zell described the current state of play in residential real estate as "the beginning of the clearing process." He insisted that "we'd be further along if the government had stayed out of it," calling it fruitless to try to keep people in homes they can't afford. But given the long-term demographic trends in the United States, he is confident that the market will eventually bounce back, starting with multi-family units.
His outlook was considerably less upbeat for commercial real estate, particularly the hotel business and the office market, where most owners have no equity and transactions have come to a screeching halt.
Retail, too, is going through a painful contraction, Zell said, since "a lot of retail was created during the boom that was instantly obsolete." A number of strip centers and marginal malls are in real trouble, he noted.
Despite the shaky loans they hold, Zell predicts that lending institutions will experience relatively little pain, as private investors will scoop up distressed properties. "The animal instincts are out there," he said. "I'm still an optimist."
This event was open only to Milken Institute Associates. To join or learn more about the program, please contact Mindy Silverstein, Director of the Associates, at (310) 570-4634 or msilverstein@milkeninstitute.org.
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