Mack, Roth and Zell tell ‘a tale of two cities’

By Adam Fusfeld | April 08, 2011 11:32AM

From left: the Empire State Building, Steve Roth, William Mack, Sam Zell and the Capitol Building in DC

Some of the industry’s biggest names, William Mack, Steve Roth and Sam Zell, said the real estate markets in
New York City and Washington, D.C. have essentially recovered. The problem is the rest of the United

During the NYU Schack Institute of Real Estate’s annual REIT symposium at the
Pierre Hotel On Fifth Avenue yesterday, the industry giants gathered to share concern over America’s
future, particularly in terms of real estate.

In the past, Zell and Roth, the chairmen of Equity Investments Group and Vornado Realty Trust, respectively, said smaller markets roughly
followed the central ones, but that’s not the case in the current recovery. And that’s hurting the U.S.

“You can’t have a strong real estate market in this country, if commercial rents are only strong in two
cities,” Zell argued. He added that the rest of the country’s real estate markets will only improve when
the spread between rents in New York and D.C. compared with those in the rest of the country, are so
large that firms would feel compelled to leave those cities in search of cheaper rents.

Combine that inequity with the looming possibility that the dollar loses its status as the world’s reserve currency,
and Zell said that the American standard of living could soon fall by 25 percent. For a brighter future,
Mack, the CEO of AREA Property, pointed to Turkey, where he just opened a mall in Istanbul, while Zell extolled the virtues of Brazil
where retail growth is approaching 15 percent.

As for Roth: “I’ll take New York and Washington, thanks,” he said.