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Billionaire investor Sam Zell, who correctly called the top of the last commercial real-estate cycle, is predicting global problems will likely push the U.S. into a recession in the next year.

While the U.S. is humming along fine at the moment, Mr. Zell warned that it isn't immune to problems in the world economy. Those problems include low oil prices, falling import demand from emerging economies, volatile financial markets, deflation, possible negative interest rates and currency exchange rate fluctuations, he said.

"I'm not being pessimistic, I'm being realistic," he said last week at a real-estate conference in New York. The U.S. economy is now "in the ninth inning," he said.

In 2007, Mr. Zell famously sold his Equity Office Properties Trust in a $39 billion deal just before the market crashed. He also made a fortune buying discounted assets in the wake of the recession of the early 1990s, a strategy that earned him the sobriquet of the "grave dancer."

But other real-estate investors who also have amassed admirable track records have a less dire outlook. "It's definitely too early to call the end here," said Jonathan Gray, global head of real estate at Blackstone Group, at the same real-estate conference. "Growth will continue to be there—just not as strong as seen in the past."

This isn't the first time Mr. Zell has talked about a recession. In 2012, he warned that corporate enterprises were delaying projects and other capital expenditures, indicating a lack of confidence in the economy. He also said the government's quantitative-easing economic stimulus program had created an excess flow of capital, where too much capital was chasing after too few opportunities.

"It's very hard not to assume that we're on the cusp of going back into a recession," he said in a 2012 interview with CNBC.

Real-estate investors are more than ever polishing up their crystal balls because commercial property values have been on a mostly uninterrupted upward march since 2009. Over the past year, concerns over when and how much the Federal Reserve will raise interest rates have taken a toll on real-estate investment trust prices.

"We're probably approaching a correction at some point, given how long it's been going on, but the question is how deep will that be," said Owen Thomas, chief executive of Boston Properties Inc.

Some REIT chief executives said they are preparing for a downturn—although many believe it is still on the distant horizon.

"We've been deleveraging like most of our peers have, and positioning ourselves so that when the recession hits, we have capital to go out and acquire at good prices," said James Connor, CEO of Duke Realty.

Mr. Connor said he expects a correction at some point, just not likely in the next year. "We're about 30 months beyond the average length of a recovery," he said. "Is it going to end tomorrow? Probably not. But, I don't know if any of us are bullish about 2017 and 2018."

When the recession does hit, Mr. Zell believes it will be a "significantly milder version" than the previous one. In the real-estate world, he noted that companies have far less leverage today than they did in 2007, which will make it easier for them to weather through the downturn.

In recent months, Mr. Zell has been selling properties in his Equity Residential and Equity Commonwealth portfolios. Over the past 18 months, he sold $3.5 billion of Equity Commonwealth properties, and, in January, he sold a 23,000-unit Equity Residential portfolio for about $5.4 billion. Mr. Zell said the Equity Residential portfolio sale was part of a restructuring aimed at selling properties in suburban markets to focus solely on densely populated ones.

As evidence of global economic problems, Mr. Zell noted that Nigeria slashed its 2016 economic growth projection to 3.2% from 6.3% in 2015. "For an emerging market like that, it's a disaster, and that's happening all over the world," he said. "So, I just don't think the U.S. can avoid it."

The U.S. also is deeply "polarized," which led to the popularity of Donald Trump. He sees Mr. Trump as an "enormous wild card" whose leadership is "full of risk." All his campaign has said is 'it's going to be great' and to 'trust me,' said Mr. Zell.

"If somebody needs a bell ringing to figure out that the real-estate market is pretty frothy right now, then I'm in the business of selling hearing aids," he said.

(END) Dow Jones Newswires

April 19, 2016 12:05 ET (16:05 GMT)

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