Billionaire Sam Zell Says Economy ‘Permanently Scarred’ By Pandemic, Some Business ‘Can’t Reopen’

The economy will be “permanently scarred” by the coronavirus pandemic as badly as it was during the Great Depression, billionaire Sam Zell said in a Tuesday interview.

“Even in the 50s, which was … 25 years after the end of the Depression, there were still parents of friends of mine who talked about the Depression and talked about the impact on their family,” Zell said in the interview with Bloomberg TV. “‘Permanently scarred,’ I think, is exactly the right word. I think there’s very little doubt that we are all going to be permanently scarred by having lived through this.”

He added, “Just like we won’t see a lot of retailers reopen, I think we’ll see a lot of hotels that basically can’t reopen.”

Shares of the 78-year-old real-estate investor’s largest publicly traded company, Equity Residential, fell from $87 to $51 between February and March, a decline of 40 percent, before rebounding slightly to $62 this month. Zell said he hasn’t taken advantage of the weak real-estate market because reality has yet to sink in for sellers.

“I think everybody is in kind of a … deer-in-the-headlights kind of stature at the moment. At least so far, just sitting here watching, we’re not seeing anything happening, Zell said. “My guess is, those sellers that wanted to sell still remember the prices that were available seven or eight weeks ago. The buyers are looking at a very different world and expecting to see significant discounts. When you’ve got that big a spread, nothing happens. … Too many people are anticipating a kind of V-like recovery.”

Zell said his comments applied to American social life as well as the economy. “I haven’t shaken hands with anybody in eight weeks. I have no frame of reference for that. It’s never been the case before. So we’ve seen our whole lives changed, and I think your ability or your likelihood of forgetting that is going to take a long time.”
 

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