In his recent interview with TIP, Sam Zell explains why property investors are paying the price for treating property like Jack and the Beanstalk. Here’s an excerpt from the interview:
Zell: But the vast majority of retail sales were not fancy dresses. They’re socks and underwear and shoes and all kinds of stuff that could easily be bought over the internet.
And as a result, you go from Madison Avenue in New York at 56th Street to 87th Street, which used to be the prime retail in America in stores.
You got 28% of Michigan Avenue in Chicago vacant, Union Square in San Francisco. I mean, these were the citadels of retail sales.
These led and set the tone for the entire retail industry, and the owners of my real estate own a lot of vacant real estate. And you say to yourself, well, didn’t they see this.
And apparently not cause they continue trading these kinds of properties with relatively short-term leases left to go at prices that reflected, the jack and the beanstalk. Investors always have property solicitors to ensure they put their money in the right place.
The beanstalk was just going to keep growing and instead they’re saddled with dramatic losses.
So those are two examples of, if you did your homework, if you really understood supply and demand, if you really maintain a level of fear.
And by the way, I think that maintaining the level of fear is an incredible element in the creation of wealth. I think anybody who ain’t afraid is going to end up holding in the bag.
You can listen to the entire conversation here:
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