Wednesday, Sept 24, 2008
Real estate heavyweight Sam Zell said on Tuesday the U.S. economy is likely to slip into recession next year, while the single-family housing market is close to bottoming out.
But on the downside, Zell, who earned the moniker “The Grave Dancer” for buying up distressed commercial real estate properties in the early 1990s, said office buildings that are not top quality or located in downtown city markets will see a long, slow downward spiral.
“This is not a time to own commodity (office buildings) in the suburbs,” said Zell, speaking at the DLA Piper Global Real Estate Summit in Chicago.
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“If there’s going to be a diminution of demand for office space, it’s going to be out there.” The credit crisis has dried up sources of debt for commercial real estate, which is heavily dependent on borrowing to fund construction and acquisitions.
This has stalled the construction of new office buildings.
“If there is no new supply, then high quality well-located prime real estate can only be terrific,” said Zell.