Demand for office space is likely to rebound from depressed Covid pandemic levels long before retail properties, property billionaire Sam Zell told CNBC on Tuesday.

“Everything between the top mall and the corner grocery anchor mall …  [there’s] a serious question as to its viability,” Zell said in a “Squawk Box” interview. “I think retail is much more of a falling knife than office, and I think that office is likely to recover much quicker than retail.”

The Equity Group Investments founder expects the office market to rebound once Covid becomes “less of a risk,” albeit with hybrid work becoming part of the norm. The speed of recovery will depend largely on thriving industries that hire more workers to come into the office, he added. “Ultimately the amount of time people spend in the office is gonna be very much related to the demand for their time.”

However, the office market is still not without its own problems.

“Obsolescence is a big factor in the office market, and I think it’s gonna make some assets unsaleable without significant investment,” Zell predicted, saying his investment company has not been putting money in the office market.

“There’s a disparity between office prices and office attractiveness. There’s been relatively little change in pricing. We haven’t had any kind of distressed scenario,” Zell said, adding that dynamic could change as market interest rates tied to bond yields have climbed in recent weeks.

Low rates have kept the office market stable, Zell said. But as he has in the past, Zell thinks the Federal Reserve needs to raise policy rates immediately. The Fed, which begins its two-day January meeting Tuesday, is expected to increase rates four times this year, starting in March after bond-purchase tapering ends.