Sam Zell Thinks Workers Will Return to the Office

CRE legend Sam Zell told an audience full of NYU grad students on Wednesday that if they want to have successful careers in commercial real estate, they need to forget about working from home.

Zell was the luncheon speaker at NYU SPS Schack Institute of Real Estate’s annual REIT Symposium, held at NYC’s opulent Pierre Hotel on Fifth Avenue.

In an armchair chat with Marc Norman, associate dean at the Institute, Zell provided a litany of biographical anecdotes of his rise as a youthful entrepreneur selling magazines to become the founder and chairman of Chicago-based Equity Group Investments.

When the subject turned to the state of the office market and the impact of remote work, Zell lived up to his well-earned reputation as someone who never pulls his punches.

“I wouldn’t want to be an owner of a lot of Class B offices right now,” he said.

“I think all of the discussion about work from home is basically a bunch of B.S.” Zell declared, to a smattering of applause from real estate execs attending the symposium (and no, Sam didn’t use the acronym).

“I don’t know how a young person who wants to be recognized, who wants to be rewarded for superior effort, can do so if the person who makes the decisions about them doesn’t see them at work,” he said.

Sam made it clear he practices what he preaches: “On the first day of Covid, nobody was in our office. Six months later, everyone was in our office—and they have been for over two years,” he said.

“One of the biggest lies in the world is that people working from home are more productive than people working in the office,” Zell said. “You have much less productivity if you’re working from home in your pajamas with three little kids running around than if you’re in an office.”

When the 20-somethings in the room did not respond with an ovation, Norman helpfully suggested that attitudes about work from home are “a generational thing.”

“Young people need to develop their skills and you can’t develop those skills if you’re not in the office,” Zell persisted. He said work from home also is detrimental to top executives.

“There’s an enormous difference between a Zoom board meeting and a meeting in person,” Zell said. “A Zoom board meeting is a board meeting where everyone sits and listens to recitations. An in-person meeting is where the real discussion takes place.”

According to Zell, he’s seen statistics that reveal that East of the Mississippi, “85% of office space, [Class A and B], is in use.” West of the Mississippi, there are still a lot of people working from home, he said.

“We’re all reading about layoffs in the newspapers. It will be interesting to see what percentage of those who lost their jobs worked from home and what percentage of them are people who came into the office,” Zell said.

The Chicago CRE legend hinted that he doesn’t think remote work will last much longer. “The office situation will change,” he said. “People need to be together to develop their skills.”

Zell, who disclosed to the audience during his chat that he passed up an opportunity to buy the World Trade Center before Larry Silverstein did, got a surprise in-person greeting from the NYC real estate titan when the luncheon began.

When it ended, GlobeSt. got a chance to ask Silverstein a quick question before he was pulled away to pose for photos with Zell. We asked him if he’s concerned that an impending wall of maturing CMBS loans and plunging office valuations will generate an avalanche of distressed properties in New York City.

“I don’t know if it’s going to be an avalanche,” Silverstein told us. “There will be an opportunity for us to get distressed properties.”

“For some, when a person loses a property, it’s distress,” he added. “For others, it’s an opportunity. It works both ways.”