Keynote speaker Sam Zell this morning offered a mixed assessment of the REIT industry at New York University's eighth annual REIT symposium entitled, "REITs After The New Economy -- Navigating Through Turbulent Times.""

Zell -- chairman of Equity Group Investments LLC -- praised the REIT sector for owning and assembling some of the "finest assets" in the entire real estate industry, but was skeptical about the industry's ability to operate these assets. He also raised questions about the growing number of people who track the industry for a living -- analysts. "

"Our industry suffers from too many analysts. And since ours is a relatively slow-moving industry, the analytical community periodically reaches out to some issue so they can quote unquote opine and gain stature among us," said Zell. "This is an attempt to come up with something to talk about.""

Zell also addressed one of the industry's pressing questions: What inning are we in when it comes to the market? According to Zell, the first pitch wasn’t that long ago. "We are in the embryonic stages of creating a liquid real estate market, and we are being mimicked and followed everywhere else in the world.""

Despite its embryonic stage, Zell attributed today's pessimism to the fact that the market is skimming the bottom now. One problem with such a bleak outlook, said Zell, is that "it's very, very hard to make progress if you spend all of your time looking backwards." He added that REITs, in fact, are stable. "

Still, he was critical of those who praise REITs as the "least-worst" investment. REITs have adopted a "relative performance" model in which they appear to be doing well when compared with the broader markets, Zell says. "That's like comparing leprosy to cancer. Since when did anyone in this room make any money on relativity?" "

He acknowledged that REIT stocks have sunk less than others, but advocates a "concerted effort" by the REIT industry to outperform the market. "We have a lot of work to do, and we have got to get better," he explained. "But we've set our standards too low.""

Within the next 10 years the industry should thin out considerably, Zell predicted. "We now have 215 REITs. We probably have a need for 30. Maybe. Somehow or another over the next few years we will have to get that number down so that we can concentrate efforts and interests in large enough companies to make a difference. I want to remind you all that in 1920 there were 200 car manufacturers in the United States. Today there are two and a half. Don't hold your breath," he said."

However, Zell predicts that U.S real estate market is on the verge of "an extremely positive period." "

"As an asset class we are likely to outperform all of our competitors over the next five years," he said. "We should be proud, and I believe there's a great future for us."