Zohran Mamdani is the clear front-runner to become the next mayor of New York City, creating what a number of real estate investors and business leaders view as an existential crisis.
The Democratic socialist’s agenda, including controls on rent, increased corporate taxes and more government involvement in housing development, may feel like uncharted territory to those in the real estate industry who worry about an outflow of investments from the nation’s financial center.
Mamdani, who won the Democratic primary in an upset in June, is hardly the first big-city candidate to champion sweeping housing reforms and tax policy shifts aimed at improving equity. In recent years, both Chicago and Los Angeles elected progressive mayors over the objections of entrenched business interests.
Yet, as their early tenures have shown, translating campaign rhetoric into tangible policy change is often more elusive than anticipated. Promises to overhaul housing markets and reconfigure municipal tax structures have met resistance — not only from political opponents but from the complex realities of urban governance itself.
This dynamic has played out in Chicago, where former teacher Brandon Johnson became mayor after running on an agenda that leaned far left in 2023. Johnson’s time in office has made it clear that ideas floated on the campaign trail don’t necessarily translate to concrete policies that will affect real estate investors.
Johnson's efforts to raise real estate and corporate taxes to fund social initiatives have largely failed in the face of active resistance from real estate and business advocacy groups and a historically low approval rating.
Progressive concepts involving real estate also have proved difficult to enact or follow through on in other Democrat-led cities, such as Los Angeles, Boston and Washington, D.C.
History shows that, though mayors can accomplish much in even a single term, they are unable to act unilaterally, said David Tarter, a former mayor of Falls Church, Virginia, who now leads a real estate program at George Mason University. Regardless of their beliefs, mayors need community support and a legislative body to enact change, Tarter said.
“I think mostly the marketplace, and folks in the real estate business, welcome carrots and not so much sticks,” he said.
Here are examples of how social justice politics and real estate policy have coexisted in some large cities:
Chicago
Chicago’s real estate professionals and the broader business community expressed fears in 2023 as Johnson won a mayoral runoff election. Johnson defeated Paul Vallas, who was viewed as pro-business and made reducing crime — a key issue for property owners, employers and residents — the primary issue in his campaign.
Johnson, who was backed by the Chicago Teachers Union, proposed tax initiatives that opponents said would stifle business growth and a recovery of key corridors such as the Loop business district and the Magnificent Mile shopping avenue.
Many of Johnson’s initiatives have been doomed by his historically low approval rating, pushback from city officials and organized opposition from real estate interest groups.
During the campaign, Johnson proposed reviving a long-dead, $4 monthly tax per employee on large Chicago companies, which opponents view as a disincentive to hire or retain downtown office workers.
He also supported pushing up already high hotel taxes and said he backed a so-called mansion tax that would increase real estate transfer taxes on sales of homes or commercial properties topping $1 million.
Johnson pledged to stop property tax increases, a campaign promise that he reversed himself on when he proposed a $300 million hike in late 2024. The City Council voted 50-0 against the measure.
Earlier this month, Johnson once again floated the idea of a corporate head tax to help fill a 2026 budget gap, this time seeking $3 per worker each month. That effort has been met with immediate opposition from, among others, Illinois Gov. JB Pritzker, members of Chicago’s City Council and the Chicagoland Chamber of Commerce.
The $4-per-worker tax policy previously was in use before then-Mayor Rahm Emanuel, who was widely viewed as a pro-business city leader, ended it in 2014.
One of Johnson’s highest-profile defeats was the Bring Chicago Home initiative, which would have more than tripled the transfer tax on commercial property and home sales of more than $1 million to help address homelessness.
City Council members pushing for the measure saw their efforts stall under the city’s previous mayor, Lori Lightfoot, before Johnson backed a renewed effort to create a ballot referendum.
Opponents such as BOMA/Chicago, a trade association for 240 Chicago buildings, mounted a public campaign against the ballot measure. BOMA said the city already had the second-highest commercial property taxes in the nation and that Bring Chicago Home would push up Chicago’s transfer taxes from No. 4 to No. 2.
Despite unanswered questions about how the funds would be used, the City Council voted in November 2023 to approve a resolution to create a ballot referendum on the issue.
A BOMA-led real estate coalition sued in early 2024 to block a referendum vote, arguing in its complaint that the bundled, three-part nature of the ballot question violated Illinois municipal code and the state constitution.
A Cook County judge sided with the plaintiffs, ruling that votes on the issue would not be counted. The Illinois Appellate Court reversed the decision just ahead of the election in March 2024, taking the issue to voters. The referendum was then rejected, dealing Johnson a setback on one of his key issues.
Critics also believe Johnson has done little to quell concerns about issues such as crime, further suppressing the property market. But the mayor hasn’t failed to gain some traction with the real estate industry.
One area where many developers back Johnson is in his efforts to follow through on a plan first pitched by Lightfoot to commit tax dollars to subsidize conversions of outdated office space in towers on and around LaSalle Street into apartments. Plans setting aside at least 30% of the units with affordable, below-market rents are eligible for subsidies.
The first project, a partial conversion of the tower at 79 W. Monroe St. into 117 units, is underway.
Los Angeles
Many Los Angeles commercial real estate pros were hopeful that the "housing-first" agenda Mayor Karen Bass promoted on her campaign would unlock new development opportunities.
Two years in, some now feel her policies — particularly her inability to block the implementation of the Measure ULA "mansion tax" on high-ticket property sales — are preventing the city from fully recovering from the pandemic. The voter-approved transfer tax on high-value property sales has curtailed deal activity, real estate professionals say.
To be clear, Bass did not propose the mansion tax. And her efforts to streamline the city's slow permitting process have earned praise, such as Executive Directive 1 and SB79, two measures designed to speed up the development of affordable housing. Still, some developers say she has failed to reverse the city's reputation as a risky place to invest.
“While she has made strides in addressing needed affordable housing and development bottlenecks, her relationship with the [commercial real estate] community has been arduous,” Chris Cooper, principal and regional managing director of the western United States for Avison Young, told CoStar News. “Any positive new progress will depend on how effectively she can balance political priorities with the need for economic growth.”
Sean Burton, CEO of multifamily development firm Cityview, noted that Bass has been actively working with developers and legislators to mitigate the effects of Measure ULA. The tax, expected to generate $1 billion annually only to fall short of projections, has been blamed for a sharp drop in permits and for driving investors away from Los Angeles despite relatively strong fundamentals.
Bass has committed to find a legislative fix that could reignite development in Los Angeles. Regarding a compromise bill that would have exempted the first 15 years of a project from the tax, “we were very close,” Burton told CoStar News. “The mayor’s given her word that she’s going to bring it up in the beginning of January.”
Bass signed ED1 on her first day in office, and the measure has since resulted in the approval of 29,000 affordable housing units. That's more than the total number of affordable units proposed in 2020, 2021 and 2022 combined, according to the Department of City Planning. She followed this with ED7, expanding streamlining to mixed-income developments and adaptive reuse. These directives have cut approval timelines from months to weeks.
Bass has fallen short in convincing the larger business community that Los Angeles is a safe investment, some critics say. Burton argued that investor confidence hinges on a city’s brand and narrative, pointing to San Francisco’s recent turnaround as an example of how strong mayoral leadership can reshape perceptions and attract investment — even before substantive policy changes take hold.
“The mayor’s biggest job is to be a cheerleader and make businesses feel comfortable expanding in their city,” Burton said. "We need to show that we are pro-jobs and going to bring down costs.”
Bass has found supporters among progressives and housing advocates. Potential challengers include developer Rick Caruso, who lost to Bass in 2022 but remains active in post-wildfire recovery efforts and has criticized her handling of the January disaster.
Bass has not formally announced a re-election bid, but insiders expect her to run again.
Boston
Boston’s commercial real estate market is feeling the squeeze — from high interest rates and construction costs to a lingering post-pandemic office vacancy crisis. The area's life sciences sector, which was booming not long ago, is now dealing with record-high lab vacancies. And multifamily housing starts? They’ve dropped to the lowest level in a decade.
Mayor Michelle Wu has shaken up the city’s planning landscape. She created Boston’s first new Planning Department in 70 years, aiming to separate long-term planning from project approvals and put community needs front and center. Her administration marks a shift away from deal-by-deal negotiations toward clearer rules around affordability, climate resilience, and equity.
Wu’s made some big moves on the development front. She raised the minimum affordable housing requirement from 13% to 20% of units in new buildings. She also hiked the fees that large commercial projects pay to support affordable housing and job training — and lowered the size threshold so smaller projects now must pay, too. To tackle the glut of empty office buildings downtown, she rolled out a program offering developers steep property tax discounts — up to 75% off for nearly 30 years — if they convert those offices into housing.
Her downtown strategy leans heavily on converting underused office space and upzoning for taller residential towers. The plan allows buildings up to 700 feet in certain areas, as long as they include substantial residential use. Early conversions such as 281 Franklin Street and 263 Summer Street have already provided new housing and helped revive street-level retail, pointing to a more mixed-use future for downtown.
“We must take every possible action to create more housing and more affordability so that Boston’s growth meets the needs of current and future residents,” Wu said in a statement when launching the office-to-residential conversion program. She’s consistently framed development as a tool for equity and sustainability — not just economic growth.
Still, critics say her policies may be mistimed. Developers argue that higher affordability mandates, increased fees, and rent control proposals are making Boston less attractive to investors. Some have paused or scaled back projects, saying the numbers just don’t work — especially for smaller developments.
Wu’s broader reform agenda has also hit roadblocks. Her rent control proposal, which would cap annual rent hikes at inflation plus 6% (with a 10% max), exempts new construction for 15 years but needs state approval. It passed the City Council but remains stalled at the state level amid strong industry opposition.
It’s the same story with her push to raise the commercial property tax cap to shield homeowners from rising assessments. Despite a compromise that included protections for small businesses, the state legislature rejected it.
Even so, Wu cruised to re-election in 2025, running unopposed after her challenger failed to qualify for the ballot. But with the development climate cooling, she’s under pressure to recalibrate. Some critics are calling for a rollback of affordability mandates to jump-start construction. The business community is watching closely to see whether her second term will strike a more developer-friendly tone.
Washington, D.C.
Commercial real estate leaders around Washington, D.C., have supported much of the work Mayor Muriel Bowser has done for the industry since she took office in 2015.
In the decade-plus since she stepped into the top local government role in the nation’s capital, Bowser has sought investment by championing rewards to developers that convert empty office properties to other commercial uses, led efforts to revamp corners of the city via recreational projects and encouraged housing policy reform to speed the sale of multifamily buildings, all while navigating a delicate relationship with national leaders who possess significant oversight over the District.
One of Bowser’s well-received moves has been a tax incentive initiative for office-to-residential projects. There are already eight projects underway since it launched last year.
Bowser and her administration have also played a key role in attracting sports and leisure projects to the District to revitalize segments of the city.
The modernization of a downtown indoor arena is in the works, a wellness retreat is planned for an underdeveloped area, and construction of a new NFL football stadium is expected to begin soon.
Meanwhile, legislation Bowser proposed, which was later revised, was working its way through the local legislature last month in a move that was supported earlier this year by members of the development community. It would reportedly exempt building owners seeking to sell certain multifamily properties from an earlier regulation that would otherwise require them to provide an offer of sale to tenants.
"The burdens imposed by [that earlier regulation] combined with unfavorable policies have nearly eliminated institutional investment in new market-rate housing in the District,” Bob Murphy, managing principal of D.C.-based real estate development company MRP Realty, said in May during a D.C. Council hearing.
Bowser has served in various positions as an elected leader in the District since 2004. Looking forward, she and her team have proposed legislation to streamline zoning appeals, to provide an appeals process for examples of “onerous taxation that inhibit investment in commercial properties,” and to create new streams of revenue for businesses via casino games such as poker.
‘Overhyped’ fears
It remains to be seen if Mamdani can fully enact the ultra-progressive agenda on which he campaigned. Still, the clues offered outside New York on how his leadership might play out offer slivers of hope for those who fear the worst.
“The doom and gloom is probably overhyped,” said Jonathan Miller, president and CEO of appraisal firm Miller Samuel. Home pricing and sales data bear that out, he told CoStar News.
“It strikes me as fear mongering,” Miller said. “I’ve seen the city in a much worst state in the ’80s when I first moved here. You know, piles of rubble in the East Village, and a lot more crime.”
Still, others worry that their worst fear will be realized, leading to a major downturn in property values and a shift in business investment dollars to other cities.
“The industry is on ultra-high alert,” Greg Kraut, co-founder and CEO of New York real estate firm KPG Funds, said in an interview, adding the concern goes beyond how Mamdani plans to pay for “all the free stuff” he promises.
“The biggest issue that everybody has is it doesn't matter how much of appeasement you could make, he has said he hates capitalism,” Kraut said. “He wants a fundamental shift in what has built this country. He doesn't hide it.”
Without naming Mamdani, JLL’s chairman and president of the New York Region, Peter Riguardi emphasized the importance of a city’s top leader earlier this month at the Avenue of the Americas Association’s awards gala in Manhattan.
“The mayor matters,” Riguardi said. “I've heard too often in our industry … it doesn't matter who the mayor is. Well, I'm 64 years old, and I've witnessed a few mayors, and I can tell you personally [that it matters]. If you look around San Francisco [with] a new mayor, it matters. If you look around in Portland and Chicago, the mayor matters.”