In the world of real estate, few figures have left as indelible a mark as Sam Zell.
A contrarian investor, Zell was known for seeking out unconventional opportunities, identifying undervalued assets, and fearlessly executing. He was famously quoted as saying “I made my fortune by turning right when everyone else was going left”. But what will forever cement his legacy in the industry is the work he did back in the early 90s when he created Equity Office Properties Trust, the first REIT to be included in the S&P index. By adding REITs to public markets, the real estate industry became a true benchmark for investors. Since that time, the market cap of REITs has grown from $9 billion in 1990 to roughly $1.2 trillion today, and more than 150 million Americans own REIT stocks either directly or indirectly.
As a senior at the University of Missouri-Columbia back in 2007, I had the opportunity to meet Sam Zell and hear him speak at our business school. It was a day I will never forget, as it solidified my decision to pursue a career in real estate, a decision I had been teetering on for months leading up to graduation. Sam was nothing like the vision I had in my mind of what a successful real estate professional would look like. He pulled up in a motorcycle, wearing jeans and a leather jacket, and couldn’t have been a hair over 5 feet tall. But the second he walked on stage he commanded the room with his confidence and energy, and a wealth of knowledge to back it up. He spoke on a variety of engaging topics that day including his recent $39B sale to Blackstone, the evolution of the REIT and the opportunity it afforded the every day American to invest in real estate, and his long term optimism on global real estate due to availability and amount of equity flooding the industry. I left the auditorium that day feeling so energized about real estate that I halted all my job pursuits in the financial services sector to solely focus on commercial real estate, all thanks to Sam Zell.
One of the most remarkable aspects of Sam Zell’s career was his ability to adapt to evolving market dynamics while constantly searching to find opportunities where others see obstacles. As I think about the current state of real estate and all the obstacles ahead of us, especially the office sector in the post pandemic environment, I can’t help but draw inspiration from the visionary mindset of Sam Zell. By embracing uncertainty instead of fearing it, perhaps we can reshape the office market into a vibrant and resilient sector for the future. Sam Zell was an avid motorcyclist, and while I am not a rider, a mentor of mine is and he once told me that when riding in uncertain terrain the last thing you want to do is look straight down at your front wheel as doing so will trick your mind into thinking that you are going faster than you really are and that obstacles will seem bigger than they are. Instead, a rider should always look as far down the road as possible. Doing so will allow you to anticipate and process any moves well ahead of them occurring. If I had to guess, Sam Zell spent very little time staring at his front wheel.
Written by: Andy Doyle – Senior Managing Director, Principal of Global Corporate Services