Real estate executives said they are trying to find the best steps forward under a new political reality: Zohran Mamdani, a democratic socialist, is now mayor-elect of New York City.
As Mamdani announced his transition team on Wednesday, at least one of them known to the real estate industry, executives sought to assess what his victory means for property values, capital flows and the city’s standing as a global financial hub and investment safe haven. Mamdani, 34, has called for freezing rents on rent-stabilized units, raising taxes on high-earners and having the city open groceries among his talking points during the campaign.
Some say the city has survived many political shifts, while others are concerned his policies will hit the city hard. "New York's decline will be very sharp" because people and business will leave, Danny Fishman, CEO of New York investment firm Gaia Real Estate, said in an interview from his second home in Miami.
Fishman, who lives on Manhattan's Upper West Side and founded his real estate private equity firm after coming to the city 16 years ago from Israel, said he will further cut his company's exposure to the city "on every front," including investment, office and head count in the wake of Mamdani's election.
Mamdani wants to fund his agenda, a platform that also includes free buses and universal childcare, by raising the top state corporate tax to 11.5% from 7.25% while levying a 2% income tax on people earning over $1 million. He's said he wants to “require the wealthiest New Yorkers to pay their fair share.”
Studies found the top 1% of New York's taxpayers already pay about two-fifths of the city's income tax.
Bob Knakal, who has been ranked over the years as among the biggest sellers of commercial real estate in New York City, said in an interview that “a big part of [Mamdani's] platform deals with basically price fixing. In the course of human civilization, that strategy has never worked. Sometimes it has some short-term impact, but in the long term, it is very demoralizing and ineffective.”
From a strategic point of view, there's not really a lot the industry can do other than react to how Mamdani goes about implementing his ideas, Knakal said, adding that 80% of what the new mayor has talked about is “completely out of his control.”
Knakal, who started his industry career in 1984, added that "I would never bet against New York. There have been several times when people said, ‘Oh, it's over for New York.’ And New York has always bounced back. New York is tough. We’ve been through bad mayors before, and we’ll make it through this.” Knakal said that, as of Wednesday morning, none of the investors involved in several of his deals had decided to back out.
Vornado Chief Executive Steven Roth said on the company’s third-quarter earnings call Tuesday that demand for top-tier offices in the city hadn’t shown any slowing signs even with the prospect of a Mamdani administration. The mayor-elect’s press team didn’t immediately respond Wednesday to a request seeking a comment.
Appointing a familiar face
Mamdani, whose lack of management experience has been listed among concerns from business executives, included among his appointments Maria Torres-Springer, a name familiar to the real estate sector.
Torres-Springer has held numerous leadership roles in city government and most recently served as first deputy mayor in City Hall. Previous positions include commissioner of the New York City Department of Housing Preservation and Development, and president and CEO of the NYC Economic Development Corp., a pro-business nonprofit.
Political strategist Elana Leopold will serve as the transition team's executive director. Other members include former Federal Trade Commission Chair Lina Khan, nonprofit president Grace Bonilla and budget specialist Melanie Hartzog.
The “experienced transition leadership team … will hit the ground running,” Mamdani said in a statement. “From day one, our campaign was laser-focused on making this city affordable for working people. And on day one of my administration, with this talented transition team in place, we will be ready to make that vision a reality.”
The real estate industry has something to cheer for after a majority of New York voters said yes to three affordable housing-related proposals on this year’s ballot that aim to fast-track or simplify project reviews, setting up a shift in power on land-use decisions that have been tightly controlled by the City Council.
“The approval of these ballot measures is another helpful step in the long, but critical effort to address New York City’s housing supply crisis,” James Whelan, president of the Real Estate Board of New York, said in a statement Wednesday. REBNY said in a separate statement Tuesday night that it’s prepared to work with Mamdani.
Common ground
On Wednesday, business professionals said New York’s allure as a place where young college graduates want to live will keep companies in place.
Kathryn Wylde, president and CEO of the nonprofit Partnership for New York City, whose members include major U.S. employers such as JPMorgan Chase and Amazon, said in an emailed statement that the business community looks “forward to helping [Mamdani] achieve his affordability goals while keeping New York competitive as a destination for talent and a generator of jobs and economic activity.”
Billionaire investor Bill Ackman, an outspoken critic of Mamdani, congratulated him on the social media platform X and offered his help.
“Some have been surprised by my conciliatory post to Mamdani,” Ackman said. “I care enormously about New York City which has been very good to me and my family since we emigrated to NYC in the 1890s. … While I did not support Mamdani for mayor and have concerns about the unintended and negative consequences of his policies, I want to do everything I can to help NYC regardless of who [the] mayor is.”
Still, worries remain about the impact of a democratic socialist and how his various campaign pitches may change New York’s zeitgeist. For real estate, Mamdani’s pitch to freeze the rent on the city’s 1 million rent-stabilized apartments comes as studies found those landlords are already not making ends meet amid rising costs.
"The unprecedented turnout for [Tuesday’s] election clearly shows that New Yorkers are demanding a government that delivers affordability,” Kenny Burgos, CEO of the New York Apartment Association, told CoStar News in an email. “You can't do that if you destroy rent-stabilized housing. Thousands of buildings are in deep fiscal distress and bankruptcies are growing. If nothing is done, the city will lose this vital housing forever.”
Meanwhile, some investors and lenders said they are going to take a harder look at what they underwrite in the city.
"As someone who has built a company here for over 20 years, I've never been more concerned,” William Stern, founder and CEO of small-business lender Cardiff, said in an email. “We are the financial capital of the world, and we've just handed the keys to a man whose policies are so extreme. You can’t declare war on capital and expect the city to survive. It’s economic suicide. … We underwrite on math, not hope. ... When you promise rent freezes and new taxes, you make it impossible to model cash flow. …We’ve survived blackouts, financial crashes, and pandemics because we’ve had serious, experienced leaders. Now, we’re running a dangerous experiment.”
All the firm’s new loans in New York City are being reevaluated, he said, adding Cardiff “will be far more conservative on leverage and much more selective on the assets” it will back. “The risk profile for the entire city has changed,” he said.