Billionaire Sam Zell Sees Economy Permanently Scarred by Pandemic

Nothing to Buy

Zell disagrees with the conventional wisdom that big cities like New York are doomed and warehouses are the smartest bet in commercial real estate.

For now, the raspy-voiced investor who earned his nickname, the Grave Dancer, buying distressed real estate in the 1970s, is watching from the sidelines. Like Warren Buffett, Zell hasn't found anything to buy since the onset of the pandemic. Part of the problem is a lack of deals.

"Those sellers that wanted to sell still remember the prices that were available seven or eight weeks ago. The buyers are looking at a very different world and expecting to see significant discounts," he said. "When you've got that big a spread, nothing happens."

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Shares of [his] real estate investment trust [Equity Residential], one of the biggest apartment owners in the U.S., are down almost 30% since late February. Rents, however, are holding up well enough that Zell said he doesn't expect any significant changes in monthly collections.

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For years, Zell has been warning that the U.S. construction boom would result in oversupply and lower prices, and the current shutdown "is going to dramatically make things much worse."