Sunday Summary: Zohran Mamdani Shocks CRE

Well, that was a shocker.

The real estate industry was knocked for a loop Tuesday night when Zohran Mamdani took the former governor of New York (and industry favorite), Andrew Cuomo, to the woodshed and beat him soundly in the Democratic mayoral primary.

Given that a Democratic primary win in Gotham is often tantamount to a general election victory, the industry was not prepared for the scale of Cuomo’s loss. Nor the agenda of the man who bested him.

Putting aside Mamdani’s controversial statements and Twitter activity, his advocacy for rent freezes, free bus service, city-run grocery stores and a $30 an hour minimum wage is already panicking some in the business. Mamdani “would be the death penalty for the city,” GAIA Real Estate CEO Danny Fishman told the Wall Street Journal. “And it would be the best thing to happen to Miami and Palm Beach since COVID.”

As for the prospect of Cuomo mounting a comeback in the general election on the independent line? The message we got from insiders was: Get real.

“Cuomo would lose again,” GFP Real Estate Chairman Jeffrey Gural told Commercial Observer. “I think he had his chance, and, if he runs, it’ll ensure Mamdani wins because Eric [Adams] and Andrew will split the anti-Mamdani vote. So if Andrew stays in, then the race is over, in my opinion. … I think he’s a team player and I think he recognizes that we don’t really want a socialist as mayor.”

That probably means a shift to Adams in terms of campaign donations, even if it’s a little early to say for sure.

But, either way, anyone who was predicting that the industry’s favored son was going to sail through the election and that things would get easier for New York real estate in the next four years was clearly fooling themselves.

Speaking about housing…

Whoever the next mayor is, that person will have to deal with the question of housing, and we saw some interesting stuff over the last week.

Sam Zirkiev of Zirk Group filed an application June 23 with New York’s Department of City Planning to build a six-story, 270-apartment complex (including 68 affordable units) at 135-27 Sapphire Street in Lindenwood, Queens.

Also, the New York City Council’s Land Use Committee voted to approve a rezoning for One45 for Harlem, a 1,000-unit housing development with 338 affordable units. (It must still be approved by the full council, of course.)

And, while an anti-developer mood in the electorate certainly is bad for plenty of folks in CRE, the seasoned developers have reason to think that they have the playing field to themselves. Long before the Mamdani question raised its head, developers were still having the same old borrowing problems — but the industry’s vets have been generally unafraid to deal with it.

“When capital is constrained, we see that as an opportunity because a lot of players are going away,” said Jeff Rosen of MAG Partners at CO’s National Multifamily Investment Forum on June 18. “A lot of developers are moving into other asset classes or other markets, so just looking at it from a MAG Partners perspective, the more constrained it gets, the more that very small subset of capital that’s not in the credit equity side is going to move to those top-tier developers.”

Indeed, top-tier developers like Kushner Companies and PTM Partners are able to unlock capital, as they did when they bagged an eight-year, $87.3 million loan for their luxury apartment building 2000 Biscayne in Miami’s Edgewater neighborhood.

Checking in on office

The United Nations might have its hands full trying to quell conflict in the Persian Gulf, but they don’t have to worry about their real estate. The U.N. has signed one of the biggest leases of the year: 425,190 square feet at 2 United Nations Plaza and two stories of retail at 1 United Nations Plaza.

Offices are still being sold, like 540 Broadway, which traded to Malaysian investment company MBf Holdings for a cool $30 million.

Owners like Rockpoint Group are coming to grips with new values. (Rockpoint has been selling or handing over some of its D.C. properties for massive discounts for months, most recently Tysons International Plaza and Tysons Dulles Plaza, both for about a third of what Rockpoint paid for them in 2017.)

And previously troubled offices are getting their house in order, like 404 Fifth Avenue, which the Chetrit Organization is diligently recapitalizing.

“Over the past three months we have closed three large restructuring or discounted payoffs with Rialto [Capital],” Juda Chetrit in a statement to CO, referencing its loan servicer. “We appreciate them working with us and we look forward to turning these assets around.” (Count us flabbergasted that the Chetrit Organization actually spoke to the press!)

Vacation time

Wouldn’t it be nice if, rather than getting on a plane and heading to Las Vegas, you could just stay in New York and blow your kid’s college fund without leaving the five boroughs?

Al Sharpton is essentially advocating exactly that in announcing his support for SL Green and Caesars Palace’s $4 billion proposed Times Square casino.

Speaking of which, SL Green also announced “a historic inclusive ownership model for U.S. gaming” which would sell stakes in the casino starting at $500.

But the truly spectacular vacation and hotel would not be in Times Square, New York in general, Vegas, or even in the United States. For that you have to think much more… far out.

We’re talking about the final frontier. Space travel is not just Jeff Bezos and Katy Perry. It is expected to be worth some $6.7 billion by the end of the decade. Hello, hospitality industry!

“Designing for outer space means you need to design for comfort in tight quarters, deliver elevated service in remote conditions, and personalize experiences,” said Lori Horvath of JLL. “These are all directly transferable from current hospitality design principles that are evaluated and implemented on a daily basis.”

We’re curious to see what turndown service will be like in zero gravity.

More fun!

Having gotten all that out of the way, this week CO unveiled one of its signature features for the year: Young Professionals 2025!

While CO is certainly tapped into the industry vets, this is our annual chance to check in on the farm teams.

Well, actually, most of the young pros we spoke to had advanced well beyond the farm system. They had their hands on deals worth hundreds of millions of dollars — and in a couple of cases more than that!

We selected 30 leasing and sales brokers under the age of 30; 25 debt and equity brokers under the age of 35; and 20 architects, engineers and contractors, also under 35, to highlight. (CBRE’s Henry Fenmore got the star treatment, in which we spent the day with him and his colleagues and found out what makes Henry run.)

The whole package is worth looking through at length. So find a cool spot, sit down and take a look at the future, because these pros have got it going on.

See you next week!

Department of corrections: In last week’s Sunday Summary we referred to 100,000 Americans who turn 80 years old every day. The figure is actually 10,000 Americans. We regret the error.

Disclosure: Observer Media owner Joseph Meyer is married to Kushner Principal Nicole Kushner Meyer.