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

Renderings of The William Vale and Denizen Bushwick with a Tel Aviv Stock Exchange ticker

All Year eyes sale of William Vale to pay off bonds

Breather CEO Bryan Murphy (Credit: LinkedIn and iStock)

Breather bloodbath: Flex-office startup fires 17% of staff

Stephen Levin, REBNY's Jim Whelan and Brad Lander (Credit: Getty Images)

The bill that won’t die: Will commercial rent control finally pass?

Softbank CEO Masayoshi Son (Credit: Getty Images)

SoftBank’s $3B payout to WeWork’s investors is delayed

John Legere (Credit: Getty Images)

WeWork reportedly in talks to hire T-Mobile exec as CEO

(Credit: iStock)

Small Talk: Every community meeting. About every development project. Ever.

An example of roll-off waste management (Credit: YouTube, iStock)

A win for big building owners in trash-collection fight

Duke Long and Poshtel International CEO Morten Lund

“I can talk about erections all day”: NAR tech consultant’s bizarre fireside chat