Commercial Real Estate Today

Commercial real estate magnate Sam Zell observes that there's a lot of activity going on.Eventually all that space will get filled.In apartments,they're getting very successful numbers,very rapidly getting back to the figures of 2007.There's a lot of demand for office space,but at 20-30% less than peak rates.It has to fill first.A lot of tenants want to lower square footage per employee.There's opportunity there to get much more efficient.Each segment of the commercial real estate market has to be viewed separately.
Equity International,part of Equity Group Investments,Mr.Zell's holding company,is investing in Brazil.Brazil is self-sufficient,growing,and has solved inflation.It's likely to be one of the fastest growing countries in the world over the next 5-10 years.The country as a whole has about 8% debt compared to 70% in the U.S.EGI's investment philosophy in the emerging markets is about that whole aspirational population and how they're gonna get serviced.
China's a more difficult environment to work in than Brazil.There can be very strict government control there,conforming to a goal they're trying to achieve.
In the U.S.,we're still soft on the demand side.There's a lot of obsolescent real estate,such as anchorless centers-most of them are dying-or office centers in ex-urbia.The issue in the U.S. today continues to be confidence and the unpredictability of the administration.The health care bill is a huge economic time bomb for this country,and it's gonna have to be modified,in Sam Zell's opinion.
Mr.Zell is Chairman of Equity Group Investments,the multi-billion dollar,diversified holding company which he co-founded in 1968.It is based in Chicago.