• Tue. Jul 27th, 2021

Connect Media: CRE – Chicago Commercial Real Estate News

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Chicago’s own Sam Zell sees the future of certain commercial property sectors clouded by possible oversupply, but not so much by permanent shifts stemming from the COVID-19 pandemic. Office use, hospitality and central-city apartments all will rebound, while the industry icon sees potential for oversupply in a couple of currently hot sectors.

That’s among the takeaways from Zell’s wide-ranging keynote interview last week as part of the Harold E. Eisenberg Foundation’s REAL Bright Summit: Building the Future of Real Estate. The founder of Equity Group Investments was interviewed by Collete English Dixon, executive director, Marshall Bennett Institute of Real Estate, Roosevelt University.

On the question of whether the shift to remote working will be permanent, Zell observed, “I think that most of the discussion about working from remote locations is going to turn out to be irrelevant. We are social animals. We interface with each other. We create progressive results from one-plus-one-equals-three. As soon as the central business districts are back and alive and vaccines are pervasive, you’re going to see the office space market go back to where it was before.”

Similarly, Zell doesn’t think big-city multifamily is down for the count. “Anybody who thinks the migration to remote areas is a permanent move, I got a bridge to sell you,” he said. “If you go to Podunk, every day at 5:00 is the same and there’s nothing to do. The difference is that in Manhattan, you’ve got 27 things to do.”

Although individual second-and third-tier hotels may not survive the current downturn, Zell wouldn’t write off the lodging sector. “I think we’re going to go back to conventions, back to people creating relationships,” Zell observed. “I don’t see that changing, though it will restart slowly. There’s also a huge buildup of tourism demand. People have been locked up for almost a year now.”

Conversely, Zell was less enthusiastic about a couple of sectors that have seen their stars rise during the pandemic: “You now have builders building single-family homes for the sole purpose of adding to the rental pool. I’d be waving a flag about oversupply in this sector. I would say the same thing about distribution and industrial.”

Author of the 2017 Am I Being Too Subtle?: The Adventures of a Business Maverick, Zell shared insights in the Eisenberg Foundation keynote on subjects ranging from his upbringing as a child of immigrants to his belief in giving back through sponsoring entrepreneurship.

The evening featured a second keynote interview with a Chicago real estate leader, as an alumna of the Foundation’s mentorship program, associate board member Hanna Oimoen, interviewed her mentor, Penny Pritzker. Recounting her real estate career, Pritzker noted that one of her own mentors was Zell. Like Zell, Pritzker also provided her take on the post-pandemic outlook for the major commercial property types.

Click here to watch or read the interviews with Zell and Pritzker.

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Tags: Apartments & Multifamily, Hospitality, Office, People

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Sam Zell Expects Rebound for Office, Hospitality and Big-City Multifamily

Paul Bubny