Taps Coogan –30th of August 2020

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Sam Zell, real-estate mogul and Chairman of Equity Group Investments, recently spoke with CNBC about his outlook for the real-estate market in light of Covid and the endless riots and violence plaguing American cities.

Mr. Zell on the timing of a market bottom for real-estate:

“It’s really too early for the normal clearing process and that clearing process usually leads to opportunities and I think everybody is still a little bit shaken and I think people haven’t made decisions yet and haven’t been confronted with the reality of the situation. So, I think that there will be significant opportunities, probably in the fourth quarter or the first quarter of next year. But, the pandemic has basically slowed down decision making and deferred decision making and the general activity level, from a transaction point of view, is much less at this point.”

Mr. Zell on the cause of people fleeing cities for the suburbs:

“I think Barry’s comments are exactly right (that violence and safety is a bigger factor than Covid) and that is that everybody is being driven and impacted by the issues of safety… I think that yes, people are ‘running to the suburbs’, particularly to find rental housing, but I think that is a short term response. I think that the basic reasons for cities: the fact that we are social animals, the fact the urbanization creates both challenges and opportunities isn’t about to change, and I don’t think we are going to see anything like a repeat back to the bad old days where cities were too dangerous. We obviously need a lot of enforcement and we need a lot of adjustment to these no-bail, no bad things happening. There have to be consequences…”

On the outlook for commercial real-estate:

“I am very lucky. I used to be one of the largest owners of retail in the Untied States. A long time ago, in the early 1990s, I decided that’s not where I aught to be focused and sold our entire retail portfolio… there is little question in my mind that retail is a falling knife and we are for sure not at the bottom in terms of the impact of online (sales)…”

Then, of course, there is the question of high taxes and the prospect for wealth taxes in cities like New York and, potentially, the entire state of California.

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