Mayor Mamdani: What Commercial Real Estate Can (Really) Expect Now

After months of hand wringing, binge drinking, and apocalyptic thinking among the commercial real estate elite, the dire prophecy of the anti-capitalist gods has been fulfilled: Zohran Kwame Mamdani, Ugandan-born Democratic Socialist and millennial son of an independent filmmaker and a post-colonial academic, will be the next mayor of the world’s greatest city.

Now, as Florida-bound moving trucks pack to the brim, the commercial real estate community must come to terms with a mayor that many have perceived as positioning himself against everything they stand for, and one whose basic positions could, according to some, spell the death of progress and profit in New York City’s housing market in particular.

SEE ALSO: Eric Adams’s Big Apple Appealed to Commercial Real Estate

With the election is behind us, though, and the path forward finally clear, we thought this would be a good time to take a steely-eyed assessment of what a Mayor Mamdani (practice it) really means for commercial real estate’s immediate future in New York City. 

In speaking to some of the city’s politically connected experts, Commercial Observer sought to draw a clear line between what Mamdani said he wants to accomplish and what he is likely to accomplish among his more real estate-centered proposals.

But, before we address Mamdani’s positions and potential achievements, let’s discuss how Mamdani actually functions as a political entity.

Suri Kasirer is the founder and president of Kasirer, the top lobbying firm in New York City for the past eight years. In addition to working on projects such as 5 World Trade Center, the Committee for Ranked Choice Voting, One Vanderbilt, Brookfield Place and Manhattan West, and the renovated Delta terminals at JFK and LaGuardia airports, Kasirer has been involved in five mayoral transitions.

Kasirer notes that, while many have bristled at Mamdani being a self-declared Democratic Socialist, the commercial real estate industry has always found a way to work with City Hall’s primary occupant.

“As a city, we have been through so many transitions,” said Kasirer. “Folks in real estate can work with mayors of various ideologies as long as they can find common ground, and we’ve found common ground with every mayor.”

Alicia Glen served as the deputy mayor for housing and economic development for New York City from 2014 to 2019, and later founded MSquared, which focuses on the development of mixed-use, mixed-income housing.

As a five-year member of the de Blasio administration, Glen feels that much of the trepidation around Mamdani has a familiar ring.

“This is, in some ways, very much coming full circle,” said Glen, MSquared’s managing principal. “Twelve years ago, when Bill was elected, there was this feeling that the world was going to be over, and that the Communists were coming, and New York City was going to be dead. All the rich people were going to leave, and real estate would be over, right? There was similar rhetoric in the zeitgeist.”

Invoking the old standby that you campaign in poetry and govern in prose — a phrase coined, ironically, by former New York Gov. Mario Cuomo, father of Mamdani’s just-defeated opponent, former New York Gov. Andrew Cuomo — Glen believes that much of what we’ve heard from Mamdani will turn out to have been more about communicating his aims than dictating a methodology for achieving those aims.

“A lot of what he’s saying is really about fundamental value statements, his North Stars, the principles that he believes in,” said Glen. “How that gets translated into what you can actually do, [as opposed to] what you want to do, is often very, very different.”

To that end, Kasirer noted that Mamdani has already shown an inclination toward flexibility: a willingness to learn as he goes, change tactics as he learns, and meet with people who have far different takes than he does on the political and financial realities of commercial real estate.

“As a candidate, we’ve seen somebody who’s very willing to talk to people who don’t agree with him,” said Kasirer, referencing Mamdani’s many meetings with the business community. “There’s been a willingness to sit across the table with somebody you don’t agree with on some fundamental issues and try to find common ground. I’ve seen him do that. I think that’s been an evolution for him, and it’s been a very positive thing.”

Kasirer also noted a refreshing honesty in Mamdani about the realities of what to expect from discussions of this sort.

“I’ve had the opportunity to be at a couple of small meetings [with him],” said Kasirer. “He was very clear about finding commonality in specific areas he could work on with folks across the table who he may have had disagreement with on some issues. There was something refreshing about the clarity of saying on these issues, ‘We may not find common ground, but here are some very specific ways in which I think we can work together.’”

James Patchett is the president and CEO of Gilbane Development Company, and previously served as chief of staff for Mayor de Blasio and president and as CEO of the New York City Economic Development Corporation (NYCEDC).

Recognizing that any new mayor will need a strong staff behind him, Patchett said that Mamdani is off to a solid start in that area.

“I have met with his team and been impressed by a group of smart, experienced people,” said Patchett. “As much as it is about the mayor himself, it’s also about who you hire. I really do think a lot of this will come down to who he puts in key positions, and I have some confidence, given his staff, that he’s going to be thoughtful in that process.”

As for the issues themselves, the No. 1 fear factor for CRE in Mamdani’s platform has been his promise to freeze rents for New York City’s approximately 1 million rent-stabilized apartments.

This seems to be the most likely issue on which Mayor-elect Mamdani’s actions can steer closest to his promises, though there is one potential obstacle that could be considerable.

The city’s Rent Guidelines Board (RGB), which votes on these increases annually, consists of nine members, all appointed by the mayor. Of these, three serve two-year terms, three others serve for three years, and two serve for four years. The chairperson serves solely at the discretion of the mayor.

At present, six members of the board are serving expired terms. Mayor Eric Adams could potentially appoint new members for all six seats before he leaves office, ensuring, if he is so inclined, that he appoints only new members who are against the rent freeze.  

Should Adams do this before his own term ends on Jan. 1, it would likely stall Mamdani’s rent freeze ambitions for around two years. But even that would mean the rent freeze would take effect halfway through Mamdani’s mayoralty instead of sooner, as opposed to derailing it altogether. 

“If Mayor Adams doesn’t [replace any members], then Mamdani can immediately appoint people to the Rent Guidelines Board,” said Kasirer, who noted that when de Blasio executed three rent freezes as mayor, landlord groups tried to sue, but the courts refused to hear their case.

Just about everyone we spoke with, however, acknowledged that any rent freezes for rent-stabilized housing stock cannot take place in a vacuum, but must be accompanied by some sort of assistance for landlords to prevent housing in need of maintenance or renovation from being permanently taken offline.

Glen orchestrated two of de Blasio’s rent freezes, but said that the freezes back then and those being discussed by Mamdani are “not apples to apples.”

“At the time we encouraged our appointees to vote for a freeze, there were numerous ways in which owners of rent-stabilized housing could be rewarded for investing in their properties through the rent-stabilization code itself,” said Glen. “If you did capital repairs or upgrades, you could raise the rent. It had nothing to do with the RGB.”

Unfortunately for landlords, this regulatory framework was altered in 2019 by, of all people, Gov. Andrew Cuomo.

“The changes made in 2019 were what I would call a serious overcorrection,” said Glen, referring to the Housing Stability and Tenant Protection Act of 2019. “And Andrew Cuomo, ironically, the one who was supposedly pro-landlord, completely sold landlords down the river because he was trying to appeal to progressives. It changed the game in a way that has made it much more challenging for owners of rent-stabilized properties to justify reinvesting in their properties.”

This puts the onus on Mamdani to find ways for landlords to recover losses that would be suffered due to a rent freeze. As it happens, Mamdani has mitigated his rent freeze discussions of late with talk of efforts to do just that, as he seeks to ease the cost burden for landlords in several key areas.

“To Mamdani’s credit, he has talked extensively about trying to figure out a way to mitigate increases in liability insurance for landlords, which is a huge issue for residential landlords,” said Jordan Barowitz, who runs the consultancy Barowitz Advisory, and who has worked in shaping public messaging for both the Durst Organization and the Bloomberg administration. “Liability insurance has doubled in the last decade, and it’s an especially difficult issue for affordable housing developers to manage. Mamdani has said he wants to assist Milford Street, the captive insurance company started by the affordable housing industry, in creating an alternative to the regular insurance market. That would lower costs for a lot of landlords.”

Sam Chandan, director of the Chao-Hon Chen Institute for Global Real Estate Finance at the New York University Stern School of Business, emphasized that freezing rents without mitigating expenses for landlords would have dire effects beyond the current rent-stabilized housing supply.

“Given the requirement for affordable units in new construction and office-to-residential conversions, a freeze on rent increases would almost certainly have a chilling effect on new development activity,” said Chandan.   

To that end, development activity is another area where Mamdani has made claims, including a declaration that he will seek to build 200,000 new residential units over the next decade with a concentration on permanently affordable housing. This includes a promise that “any 100 percent affordable development gets fast-tracked” as part of a $100 billion housing commitment that, Mamdani proposes, will be paid for through municipal bonds, pooled rental assistance, and activation of city-owned buildings and land.

Patchett believes that Mamdani’s housing plan does a solid job of addressing the issues that need to be addressed to create more affordable housing throughout New York City, including slashing permitting delays, maintaining staffing levels at city agencies, and cutting through bureaucratic quagmires.

“I’m really encouraged by those parts of his plan,” said Patchett. “He says that he’ll fully staff the housing agencies, including Housing Preservation and Development (HPD) and the New York City Housing Authority (NYCHA). He said he will put in a substantial amount of capital funding for new development of affordable housing, and that he will look at the process through which OMB, the Office of Management and Budget, delays approval of capital funding for individual housing projects.”

Patchett makes the essential point that all of these things are “within mayoral control.”

“Ultimately, it’s a question of how much availability of capital the city has,” said Patchett, “but there’s every reason to believe that he can do all of those things.”

Glen concurred, noting that much of the mayor’s effective power occurs in the realm of housing.

“There are a couple of areas where the mayor can have a real impact in a tangible way without a lot of legislative action or haggling,” said Glen. “The choices that the city makes about what kind of housing projects to support and how those are financed are very much within the control of the mayor.”

It’s worth noting that while Mamdani withheld public support until Election Day, he did vote in favor of city ballot measures 2 through 4, all of which are designed to speed up the approval processes for new housing developments.

By way of example, Glen cites the difference between the priorities of Mayor Michael Bloomberg and those of his successor, Mayor de Blasio.

“The Bloomberg administration chose to finance certain kinds of projects that they would call mixed-income — 80/20 projects. When we got into office, we wanted a different mix, so we directed the agencies to focus on those kinds of projects,” said Glen. “One thing the mayor can absolutely do on day one is say, ‘These are the kinds of projects I really care about,’ like senior housing, low-income housing, or middle-income housing. The mayor can say, ‘I am directing you to launch programs and start doing deals this way.’ That’s a very real thing. We did it, and every administration does it to some degree.”

A few of the ways Mamdani is proposing to pay for much of his agenda include raising the corporate tax rate to match New Jersey’s 11.5 percent, which he said within his platform will bring in $5 billion, and by imposing a 2 percent flat income tax on city residents earning over $1 million per year.

Here, success may be harder to achieve, as raising these taxes is largely a state issue. 

“That kind of tax change would require legislative approval, and the governor has signaled that she would not be amenable to that,” said Chandan. “We also want to be careful of taking steps that might erode the tax base in New York City. These kinds of things do have, at least on the margin, an impact on the fiscal competitiveness of a city.”

This caution feeds into threats that many high-earners and high-net-worth individuals would leave the city if Mamdani was elected mayor. In addition to some in real estate threatening to beat a hasty exit to South Florida, England’s The Daily Mail ran a story the day before Election Day citing a conservative British polling firm, in a survey the Mail commissioned, claiming that an astonishing 765,000 New Yorkers, or around 9 percent of city residents, would “definitely” leave the city if Mamdani were elected.

Of course, what could potentially happen is often quite different from what has actually happened in comparative circumstances. 

In 2022, Boston voters passed a tax similar to the one Mamdani has discussed, mandating that taxpayers who earn over $1 million a year have their rate on any taxable income over $1 million raised from 4 percent to 9 percent. Rather than driving an exodus, the Institute for Policy Studies, a progressive research group, found that the number of Boston residents making at least $1 million per year has actually increased 40 percent since the law took effect, according to WBUR. 

While New York Gov. Kathy Hochul has declared the raising of taxes a “non-starter,” Kasirer believes the political moment might yield some surprising results in that area, especially since Hochul faces a potentially tough re-election campaign next year.

“I think it remains to be seen where the legislature and the governor are going to be on that issue,” said Kasirer. “I suspect that this is a very high priority for [Mamdani], not because he just wants to tax people, but because there’s a recognition that the money for some of the programs he’s talked about has to come from somewhere.”

Kasirer believes this could result in some surprising outcomes. 

“I think there’s going to be a tremendous amount of pressure in Albany,” said Kasirer. “We have to recognize that in 2026, there will be a lot of folks running for office on a similar platform to Mamdani’s, and some of them are going to win. That’s going to create more elected officials that might support a Mamdani agenda. I’m not saying Gov. Hochul will agree with him, but there will be a different environment.” 

Until then, Barowitz sees shifting political winds as more likely to work against Mamdani than in his favor regarding taxation.

“Getting Albany to raise taxes in an election year is very difficult,” said Barowitz. “And, for the business community, that’s something they are opposed to and fearful of. They worry this would exacerbate companies and people leaving New York City.” 

Some, of course, are far less optimistic about Mamdani’s ability to effect change of any sort. 

Political consultant Hank Sheinkopf has worked on roughly 700 political campaigns throughout his career for the likes of Bill Clinton, Michael Bloomberg and Mexico’s former president Vicente Fox. 

Sheinkopf believes Mamdani is in for a rude awakening once he takes office.

“The crazy argument he’s making is that he can somehow restructure government. But the problem he’ll face is that he has no money to do it,” said Sheinkopf. “The state is operating at a significant shortfall, and so is the city. And as that city shortfall increases — because there will be a disinvestment, unquestionably so, there’ll be some panic — he’s going to have problems making the budget on July 1.”

Sheinkopf also believes Mamdani will have significant problems negotiating with the city’s unions.

“He has union contracts he’s going to negotiate,” said Sheinkopf. “He has this delusional idea that unions are his friends, but they’re not. This is an adversarial relationship that is simply about ensuring that workers get their due.”

And, while many are focusing on Mamdani’s potential impact on real estate, Sheinkopf believes that real estate’s reaction to Mamdani will be at least as significant.

“It all depends to some extent on what the REITs do in the first quarter,” said Sheinkopf, referring to the big publicly traded landlords. “They may cut their investments without saying anything. If they do that, then they would reduce revenue for the first quarter and even for the second. The city’s budget gets struck on July 1. The city won’t pick up the loss of revenue until the second quarter, and by then it’ll be too late.”

Time will tell whether the predictions of Mamdani optimists or naysayers are closer to the mark. 

Asked about the most potentially productive aspect of Mamdani’s campaign, Glen declared it to have been Mamdani himself.

“What I think is the most productive and interesting thing is his very existence,” said Glen, “because what he represents is a breath of fresh air, and an acknowledgment that New York City, as it has always been over 300 years, is a different place than it was, and that new leadership, new ideas and new energy need to be brought into the political discourse in a very practical way.”

Larry Getlen can be reached at lgetlen@commercialobserver.com.