Billionaire investor Sam Zell told CNBC on Wednesday that corporate leaders have a role to play in helping U.S. cities stave off a serious economic decline in the wake of the coronavirus pandemic and a summer of social unrest.
“It’s going to require leadership. It’s going to require leaders of all the companies to come back to their offices and lead the people and create the opportunity,” Zell said on “Squawk Box.” “Hiding out in the Hamptons or hiding out in Vermont or wherever doesn’t make any sense and is counter-productive.”
Zell, chairman of Chicago-based Equity Group Investments, expressed concerns about the upticks in violence in major U.S. cities this summer. He also referred to the damage and vandalism done to businesses on Chicago’s Magnificent Mile earlier this month, which the city’s mayor, Lori Lightfoot, later described as “straight-up felony criminal conduct.”
Zell’s comments came one day after global investor Barry Sternlicht suggested on CNBC that “hundreds of thousands of people” are now looking for homes in the suburbs. Although there’s been debate on how the coronavirus pandemic has influenced a migration from large cities, the Starwood Capital Group founder said he thought it was more recently driven by safety concerns.
Zell, who made his fortune buying distressed assets, said Sternlicht is “exactly right.” He added, “We’re in kind of an early stage of, let’s call it, a change. You can see it here in Chicago.”
However, Zell evinced a more optimistic view on the trajectory of urban places, calling the recent decisions from people to leave big cities a “short-term response.”
“I think the basic reasons for cities — the fact that we’re social animals, the fact that urbanization creates both challenges and opportunities — isn’t about to change. And I don’t think we’re going to see anything like a repeat back to the bad old days where cities were too dangerous,” Zell said.
Zell is also chairman of Equity Residential, Equity Lifestyle and Equity Commonwealth, three publicly traded real estate investment trusts.
Equity Residential, in particular, has a portfolio that includes apartments in major cities such as New York, Boston and San Francisco. Equity Commonwealth’s portfolio consists of commercial offices.
The future of offices has come into question due to the pandemic, which prompted a widespread adoption of remote work in order to slow the spread of the virus. Although some companies such as Twitter have given most employees the option to work remotely “forever,” tech titans such as Facebook and Amazon have recently advanced plans to add jobs in their New York City operations.
