The commercial market is “frothy” right now and low interest rates are to blame: Zell

On the resi front, "Supply is the elixir that takes care of bubbles"

TRD NEW YORK /
May.May 12, 2017 08:33 AM

The commercial real estate market is getting frothy and low interest rates are to blame for asset inflation and impending oversupply issues, according to billionaire Sam Zell TRData LogoTINY.

The low cost of capital has created an imbalance in the economy resulting in asset inflation, he told Bloomberg.

Before the recession, the average cost of capital was 5.6 percent. “5.6 percent versus zero? That creates quite a bit of stir, quite a bit of asset inflation and I think is not healthy,” he said.

As a result, the commercial market is “a little frothy.”

“I think we’re about to have very significant additional supply” on the commercial front, Zell said.

The residential side is in better shape, he said. “We’re building more multi-family housing units this year than we’ve built at any time in the last 25 years. Supply and demand will balance it out,” he said. “Supply is the elixir that takes care of bubbles.” [Bloomberg] — E.B. Solomont


Related Articles

arrow_forward_ios
Judge Janet DiFiore and Judge Rowan Wilson (Credit: iStock, New York State Courts)

High court decision has tenants stewing, landlords oohing

From left: Ace Watanasuparp, SVP National Director of Strategic Sales, Citizens Bank; Alan Rosenbaum, CEO/Founder, GuardHill Financial Corp; Mark Favaloro, President, New York Association of Mortgage Brokers

Home lending in the time of corona: “Underwriting is really difficult right now”

Sharif El-Gamal (Photo by Desiree Navarro/WireImage)

WATCH: Developer Sharif El-Gamal has Covid-19. But he’s one of the lucky ones

Knotel CEO Amol Sarva 

Another huge round of layoffs for Knotel

Miki Naftali, Steven Witkoff and Ryan Freedman

TRD Talks: How developers are contending with coronavirus

Sam Zell (Credit: Steven Ferdman/Getty Images, iStock)

The real estate market is in distress. What will Sam Zell do?

Governor Andrew Cuomo (Photo by Spencer Platt/Getty Images; iStock)

Cuomo’s foreclosure, mortgage moratorium has no teeth

From left: Realogy's Ryan Schneider, Cushman & Wakefield's Brett White and Newmark Knight Frank's Barry Gosin (Credit: iStock)

Brokerage stocks plunge amid market turmoil

arrow_forward_ios
Loading...