Office Will Recover Faster Than Retail

Billionaire Says Office Will Recover Faster Than Retail

USA – Property mogul Sam Zell forecasted that office properties would rebound much faster than its retail counterparts from the ongoing slump caused by the COVID-19 pandemic, reported Forbes magazine on Wednesday morning (26 January, SGT).

In an interview with CNBC, he predicts that employees will likely return to their workplaces as coronavirus becomes “less of a risk”.

Notably, Zell is the Founder & Chairman of private investment group Equity Group Investments. According to Forbes’ net-worth tracker he is worth at least US$5.8 billion. And the US$39 billion sale of his portfolio comprising hundreds of office properties in REIT Equity Office to Blackstone in 2007 is deemed as one of the biggest property deals in the country in history.

He expects the speed of recovery for office properties will depend on flourishing sectors attracting and recruiting more staff to work in the office. However, he also believes that hybrid work arrangements will likely become commonplace.

In contrast, Zell is more sceptical regarding retail properties such as shopping centres. He said there’s a serious question about retail’s viability, and he believes retail is much more akin to a “falling knife” than office assets.

But he noted that obsolescence is also occurring in the office market, as some properties remain difficult to dispose of without “significant investment”. There is also a prevailing disparity between office prices and office attractiveness, and “relatively little” has changed in pricing.

Nonetheless, many bluechip corporations including Google, Facebook, Deloitte, Lyft, Salesforce and Uber have permitted their employees to work from the office if they are inoculated, but they do not require staff to work full-time in the office.

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