No commercial real estate crash ahead, Zell says
While much of the financial community is holding its breath waiting for the commercial real estate market to implode, legendary real estate investor Sam Zell said predictions of a precipitous crash are way too pessimistic.
"Real estate is always a function of supply and demand," reminded Tribune owner Sam Zell. He attributes the current decline in commercial real estate prices to a "demand recession," with office and warehouse space at high vacancy levels. But he also noted no new supply of commercial real estate has been started since '07.
(AP)
"By 2011 and 2012, the lack of supply will fill those buildings. That's the good news," Zell said. "The bad news is that the buildings will be filled at very low rental rates -- so lenders won't get paid back."
Zell spoke before an audience of professional investors, who gathered to hear top money managers. The evening raised $750,000 for the www .InvestforKidsChicago.org charities. Terry Savage