Commercial Real Estate Hedges on Federal Probes Surrounding Mayor Eric Adams
New York’s mayor hasn’t been accused of any wrongdoing, but prolonged investigations that just led to his police commissioner resigning could take their toll on what’s been a warm relationship
By Mark Hallum September 12, 2024 12:27 pm
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Allegations of a bribery scheme are testing Mayor Eric Adams’s mettle, as the federal investigation threatens not only his leadership credibility — at the very least — but also his real estate aspirations.
Aside from his hangdog self-comparison to the put-upon biblical figure of Job in the days following the FBI’s Sept. 4 seizure of electronics belonging to New York Police Department Commissioner Edward Caban — who officially resigned Thursday — and First Deputy Mayor Sheena Wright, Adams has remained largely silent on the matter (The mayor’s office did not immediately respond to a request for comment.)
Leaders in commercial real estate are also careful about condemning any alleged actions by the administration. Most hope Adams will be able to keep it between the proverbial ditches to execute on initiatives like the City of Yes — the most comprehensive zoning changes in the city since 1961 — and a stronger law enforcement presence in the streets. The industry, in fact, has enjoyed a much warmer relationship with Adams than his predecessor, Bill de Blasio.
“As a leader in this town, you have to throw your weight around to get things done, and to just say that you can’t do X, Y and Z because of the legislature?” Bob Knakal, chairman and CEO of BKREA, said. “Well, that’s something you have to fight as a leader. You have to fight to change the opinion of the legislators, to get them to understand what’s in the best interest of the city. And I think that there are a lot of folks in New York that wish the mayor had a little heavier hand dealing with the policymakers.”
And that kind of influence is needed most in a city where lawmakers are hesitant to accept contributions from real estate executives for fear of public scrutiny.
“Many municipalities across the country would do anything possible to get people to move into their area,” Knakal said. “We’re very lucky in New York. We have a dynamic where there are a lot of people that want to come live and work here. But what we have to do is make reality live up to the hype, and that’s all on the policymakers to deal with crime and quality of life and safety and, you know, things that will make people want to stay once they decide to move here.”
Chaos at City Hall and a potential public relations nightmare could be a scenario in which Adams starts to see his welcome truly diminish among the people who build in the five boroughs.
“In the real estate community, where stability and predictability are paramount, these investigations introduce significant uncertainty,” Adelaide Polsinelli, a vice chair at brokerage Compass, told Commercial Observer. “Investors and developers, who are inherently cautious, may start to distance themselves, wary of any association with a potential scandal that could derail projects or slow down crucial approvals.”
Adams’s continued ability to feed the development pipeline through zoning changes and project approvals, as well as offsetting an “anti-landlord sentiment” among City Council members, will be the deciding factor in whether he can keep real estate backers happy, according to Polsinelli.
“If Adams can weather this storm and stay committed to pro-development policies, he could retain substantial support,” Polsinelli said. “However, any signs of weakened leadership or a pivot in policy could lead the community to reassess their backing.”
Nevertheless, questions over how compromised the mayor’s position actually is have already become a touchy subject for some.
“I’m not commenting on this on behalf of real estate,” Kathryn Wylde, president and CEO of the Partnership for New York City, a group for business leaders, said in a statement. “The broader business community trusts that the mayor will take appropriate action to maintain public confidence in his administration and the NYPD.”
For agencies like the Department of City Planning and the Department of Buildings, instability in the mayor’s office can pass without much wake as long as the leadership of those agencies is not compromised, according to a former City Hall official.
But the NYPD could be impacted almost immediately with Caban resigning on Thursday, which could in turn impact police department operations, the source said.
Unlike investigations into then-Mayor de Blasio’s campaign finances, Adams’s problems seem more closely tied to the operation of government, according to the source.
Should Eric Adams be afraid? It’s unclear, as he himself has not been the subject of any searches at this time, nor has he — or Caban or Wright — been officially accused of any wrongdoing.
There could be as many as four federal probes going now into the campaign practices of Adams and his administration’s officials, including questions involving campaign finances and conflicts of interest such as family members profiting from connections to those in authority, according to Politico.
It all started in November 2023 when the FBI executed a search warrant on the Crown Heights, Brooklyn, home of Brianna Suggs. Suggs was a campaign consultant to Adams during his run for mayor.
At the time of the raid, Adams was on his way to Washington, D.C., for a meeting with President Joe Biden regarding the migrant crisis. Without any warning, and coming as a surprise to the New York state congressional delegation, Adams turned around and headed back to New York to, as his administration put it, “deal with a matter.”
— With additional reporting by Isabelle Durso
Mark Hallum can be reached at mhallum@commercialobserver.com.
