A rent freeze adds a layer of stigma on NYC REITs, says Stephens' Matt Breese
Matt Breese, Stephens analyst, joins 'The Exchange' to discuss the 'Mamdani effect' impact on New York City's housing rental market.
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Yahoo
a day ago
- Yahoo
New York braces for billionaire exodus after socialist Zohran Mamdani's win
New York is bracing for an 'exodus of billionaires' after the Democrats nominated a staunch socialist as their candidate for mayor. Zorham Mamdani, a 33-year-old 'anti-Zionist', sent shock waves through American politics on Tuesday when he beat Andrew Cuomo, the former governor, in the Democratic primary, earning him the party's nomination for November's mayoral election. A rank outsider, Mr Mamdani was carried to victory by a wave of young voters who were won over by his radical campaign pledges to freeze rents and introduce free public transport and city-run grocery stores, all of which he pledged would be paid for by hiking taxes on the wealthy. The primary result has sparked panic among New York's ultra-rich, with luxury real estate agents inundated with calls from clients looking to relocate or freeze plans to move their businesses to Manhattan. One high-end broker described Mr Mamdani's victory as the 'worst thing for the housing market since 9/11', while another called it the 'nail in the coffin' for New York. 'There's an old saying in real estate: Money goes where it's welcome,' said John Boyd Jr, founder of Florida-based corporate site selection specialist The Boyd Co, who works with a range of multi-millionaire New York-based clients. 'There's alarms going off among many key executives as well as the billionaire class about New York becoming a socialist run city,' he said. Eric Benaim, a leading real estate broker known as 'The King of Queens', said that his phone has been 'blowing up' with clients panicking about the impact of Mr Mamdani's policies. 'One person just liquidated everything. He was just about to make another investment in New York city but he's now going to look elsewhere,' said Mr Benaim, the founder of Modern Spaces. 'It's the most devastating thing (to our industry) since 9/11,' he added. 'We are going to have the biggest exodus of New Yorkers since Covid - except this time, they're not going to come back. That's going to change New York.' Mr Mamdani plans to hike the corporate tax rate from 7.25 per cent to 11 per cent and to charge those earning over $1 million a year an additional two per cent in city income tax, which is expected to cost wealthy households an additional $118,000 a year. Business executives say the proposals have triggered widespread dismay, with Kathryn Wylde, the CEO of the partnership for New York City, which represents top business leaders, warning that 'terror' is being felt by many New Yorkers. Briggs Elwell, the CEO and co-founder of RLTYco, a real estate consultant in New York, told The Telegraph it was 'a time of unique uncertainty'. While James Whelan, president of the real estate board of New York, described Mr Mamdani's proposals on how to cut crime, build houses and create jobs as 'fanciful and extreme'. Many of the city's ultra-wealthy have thrown their weight behind the more business-friendly incumbent Eric Adams, who launched his re-election campaign as an independent on Thursday with a rousing speech in which he declared: 'This is not a city of handouts.' Mr Adams won as a Democrat in his first mayoral bid in 2021, but announced he would run an independent after he saw his popularity plummet following his indictment on corruption charges, which he denied. The case was later dropped by the Trump administration. Late on Wednesday, Mr Adams courted Wall Street sharks and politicos in a Manhattan conference room where they plotted how to block the rise of Mr Mamdani, according to The New York Times. As New York's top one per cent look to leave the city, low-tax states such as Florida, which does not levy income tax, are set to become 'big winners', with Mr Benaim claiming property agents are 'rubbing their hands' at the prospect of wealthy buyers flooding into the state. Mr Boyd said that he has been inundated with enquiries in recent weeks from business executives looking to move full-time to South Florida, which he called 'the sixth borough of Manhattan'. Republicans have been quick to cash in on the so-called 'Mamdani effect', with Jack Ciattarelli, a New Jersey gubernatorial candidate, inviting business owners to move to the state. 'To all the residents and business owners of New York City who don't want a socialist, defund the police, anti-Semitic mayor representing them, I encourage you to move to New Jersey,' Mr Ciattarelli wrote on X. Even members of Mr Mamdani's own party have sought to distance themselves from him, with John Fetterman, the centrist Democratic senator, describing the state assembly member's nomination as 'Christmas in July for the GOP'. Kathy Hochul, the New York Governor, also refused to endorse Mr Mamdani's tax rises in the lead up to the primary, telling reporters: 'I don't want to lose any more people to Palm Beach.' It is not only Mr Mamdani's fiscal policy that has generated consternation among New York's business leaders. A self-described 'anti-Zionist', the mayoral candidate is a staunch Palestinian supporter and incensed members of the Jewish community by refusing to condemn the phrase 'globalise the intifada'. In a city with the biggest Jewish population outside of Israel, this is a major problem, according to Greg Kraut, the CEO of KPG funds, the largest office developer in New York. 'I've probably had about 30 phone calls from clients who are very nervous,' he said. 'Any time there is a headline that says 'anti-Semite socialist wins Democratic party election', that's not good for business, is it?' Experts also fear that Mr Mamdani's plans to pay for free public transport and universal free childcare with tax rises on the wealthy are unrealistic. 'If you are making a million or more in New York City, going from four per cent to six per cent in income tax is a 50 per cent tax increase - it's substantial,' said Nicole Gelnas, a senior fellow focused on Urban Economics at the Manhattan Institute. According to the city's independent budget office, one per cent of households pay 40 per cent of city income taxes, with non-resident tax payers making up the fastest growing group of New York taxpayers. 'It doesn't take many of them to say, 'I can spend eight months a year in Florida and come back here whenever and save myself a lot of money,' to change the tax base,' Ms Gelnas added. Luxury real estate dealers fear Mr Mamdani's support for de-funding the police and abolishing prisons will drive down property prices. He has also endorsed decriminalising prostitution and pledged to block US Immigration and Customs Enforcement agents' efforts to deport undocumented migrants. The last democratic socialist elected mayor of New York was David Dinkins, whose three-year term in office from 1990 was marked by racial discord, a drug epidemic, high levels of homelessness and a soaring murder rate. 'Crime was through the roof, businesses were fleeing and public services weren't being met,' recalled Mr Kraut, warning that the election of Mr Mamdani could herald a return to those dark days. 'People have called me up from Chicago saying: 'You guys are up next,'' he cautioned. Mr Mamdani romped to victory thanks in part to a tidal wave of support from young voters, enamoured with his progressive agenda and slick social media campaign. However, real estate agents warned that wealthy liberal voters' preoccupation with radical left-wing politics is naive. 'Everyone's a liberal until they lose their limo,' said Mr Kraut. 'If those companies and ultra net worth individuals choose to leave the city, your tax base goes bye bye.' Reflecting on the long-term effects on America's wealthiest city, he added: 'New York always survives, but it's just another nail in the coffin.' Mr Boyd warned that the primary result could spook investors in the long-term, potentially sending the city into a downward spiral. He said: 'There's a very significant concern among job creators, investors and the real estate industry that New York is now always one election cycle from being a socialist-run city.' Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more.
a day ago
Mamdani's New York mayoral primary win exposes Democratic divide
Just hours after Democratic Socialist Zohran Mamdani declared victory in New York 's mayoral primary on Wednesday, a small group of business leaders convened with Mayor Eric Adams, who bypassed the Democratic primary and is instead running in the general election as an independent. Attendees were focused on strategizing how to prevent Mamdani, a 33-year-old state assemblymember, from winning the mayoralty -- and assessing whether Adams was the strongest contender to oppose him in November. Among those present was former NYC mayoral candidate and former hedge fund executive Whitney Tilson, who recently shared a debate stage with Mamdani. Tilson described Mamdani as 'very charming and charismatic,' but added he sharply disagrees with Mamdani's policies and '[About] 5% of New York City voters picked him… It's a totally rigged closed primary.' Tilson told ABC News when it became clear the race was between two people, he had hoped former New York Gov. Andrew Cuomo would win. He said he would '...continue for the next 130 days what I began in earnest 45 days ago -- to make sure Zohran Mamdani, an unqualified radical socialist, does not become mayor of our city.' Several other vexed moderate-minded Democrats, beyond the handful in the meeting with Adams, are making similar schemes, a Democratic source with knowledge of the conversations confirmed to ABC. That source suggested that some are mulling over boosting centrist lawyer Jim Walden, who is running as an independent, as a potential spoiler. And billionaire hedge fund manager Bill Ackman (who supported Donald Trump in the 2024 presidential election) pledged to bankroll whichever viable challenger vows to take on Mamdani in November. Linda Yaccarino, CEO of X, wrote that Mamdani's win was "disastrous" and that she, Ackman, and others must 'figure out a way to save New York' in response to his promise. However, former New York City Mayor Bill de Blasio said he's not aware of any progressives who are 'quaking in their boots about a particular scenario' and that serious Mamdani supporters' worries come not from threats, but 'because we should be worried of the unknown, and no one should take this general election lightly.' 'It's more than ironic that Ackman thinks he has anything left to say to anybody in the Democratic Party after his activities last few months,' de Blasio told ABC News. 'As some of these people are flailing about, they are only reminding people that Zohran's positions are going to be the majority positions in this town.' The former mayor, whom Mamdani said was the best in his lifetime, said he doesn't believe the accusations of radicalism or extremism will stick, pointing to Mamdani's strong margins from Tuesday night. 'I think the magnitude of the victory has woken up a lot of people who were buying into stereotypes -- unfair stereotypes -- of Zohran,' de Blasio said. 'You can't be extreme if such a clear majority want you. To use a New York City phrase: he's instantly been koshered." Mamdani isn't shielding himself from the incoming, either. Longtime New York powerbroker Kathryn Wylde told ABC News Mamdani called her Thursday evening, and expressed interest in meeting with the CEOs whom Wylde said were 'extremely concerned' with his economic and fiscal policies. Wylde agreed -- and plans to host a meeting between Mamdani and any of the interested 300 plus executives who are members of Partnership for the City, where she serves as CEO, during the third week in July. 'The business community will not determine who is mayor. But we want whomever is mayor to have relationships and understand the issues that will keep our city strong,' Wylde said. His campaign told ABC News he's committed to meeting 'with anyone and everyone.' 'As Zohran has said throughout this campaign, he'll meet with anyone and everyone to move our city forward. Zohran's committed to delivering an administration of excellence that delivers an affordable and safe city for everyone, not just the wealthy and well-connected,' Mamdani campaign spokesperson Lekha Sunder said in a statement. Mark Gorton, founder of LimeWire and chairman of Tower Research Capital hedge fund, said he donated $250,000 to Cuomo's super PAC, Fix the City, after it became clear that his preferred candidate, Brad Lander, would not win the primary. However, Gorton acknowledged to ABC News he did so reluctantly. 'I was like, 'I'm tired of being on the outside -- I want to be on the inside,' he said. Still, he knew his top concerns -- support for cyclists, reducing car traffic and expanding bus service -- were not priorities for Cuomo. 'Cuomo was a disaster,' the activist, who started a non-profit focused on New York's streets nearly three decades ago, said. 'He didn't even show up at the candidate forum and drives around in a Dodge Charger.' Gorton said he felt relieved when Cuomo lost, noting that both Mamdani and Lander are strong on the issues he cares about. If November's election were held today, he said, he would vote for Mamdani. When asked whether he would contribute to Mamdani's campaign, Gorton hesitated. 'He doesn't need my money. Money doesn't always make a difference," he said. Some Democrats in New York's Congressional delegation are distancing themselves from Mamdani. Speaking on WNYC's "The Brian Lehrer Show" on Thursday Sen. Kirsten Gillibrand declined to say who she would endorse. When pressed, she said: 'I vote in Albany,' and will leave the decision to New York City voters. Rep. Tom Suozzi, who represents a Long Island swing-district that includes some parts of Queens, posted on X that he continues to have 'serious concerns' about Mamdani. Yet some of the highest ranking of the delegation seem open to Mamdani. Senate minority leader Chuck Schumer and House minority leader Hakeem Jeffries, both of New York, praised Mamdani after his apparent primary win. Showing particular support for his campaign's focus on affordability, both vowed to meet with him. Rep. Gregory Meeks, (D-NY), also told ABC News he was looking to speak with the presumptive nominee. Rep. Jerry Nadler (D-NY), the most senior Jewish member of the House of Representatives, went even further. After backing one of Mamdani's challengers during the primary, Nadler has since endorsed Mamdani's general election bid. And former president Bill Clinton, who backed Cuomo, wrote on X that he is 'wishing [Mamdani] much success in November and beyond as you look to bring New Yorkers together.' Veteran Democratic strategist Lis Smith, who once worked for Cuomo and is now a critic, told ABC News centrist Democrats are partially to blame for the former governor's loss and suggested they look in the mirror. 'It is baffling that they decided to cast their lot with a disgraced former governor who was run out of office and had no new ideas or inspirational message to offer New Yorkers. Spare us the freak out,' said Smith. 'This just seems like the last gasp of the establishment and the affiliated billionaires trying to stop a grassroots moment that, frankly, they helped fuel.'
New York Post
a day ago
- New York Post
Socialist NYC mayoral contender Zohran Mamdani wants to hike property taxes for ‘richer and whiter neighborhoods'
Socialist New York City mayoral candidate Zohran Mamdani wants to hike property taxes for 'richer and whiter neighborhoods' in an eyebrow-raising proposal that aims to ease the burden on homeowners in the outer boroughs. The soak-the-rich proposal is buried in Mamdani's campaign platform that calls to fix the city's notoriously skewed property tax system, in which ritzy brownstones are hit at lower rates than homes and rentals in lower-income neighborhoods. 'Shift the tax burden from overtaxed homeowners in the outer boroughs to more expensive homes in richer and whiter neighborhoods,' the proposal reads. Advertisement 3 Democratic nominee for New York City Mayor, Zohran Mamdani, plans to hike property taxes has drawn some concern that it will tax 'richer and whiter neighborhoods.' Democrats and many Republicans have long pushed to fix the out-of-whack system that ends up hitting poorer, often largely black and brown neighborhoods, with higher property taxes than their neighbors in swanky areas that tend to be majority Caucasian. But Mamdani's specific mention of 'whiter,' wealthier neighborhoods drew outrage from some observers. Many right-wing commentators accused Mamdani, who would be the city's first mayor of South Asian descent if elected, of targeting white New Yorkers, with one labeling him a 'RACIST.' Advertisement City Councilman David Carr (R-Staten Island), who's part of the bipartisan push to reform the property tax system, said Mamdani should tone down the 'rhetoric' if he's going to help tackle a very real imbalance. 'The objective of our reforms is to make our property tax system fairer and more transparent and to ensure that middle- and working-class homeowners aren't subsidizing lower taxes for wealthy property owners,' Carr said. 'It's not about blaming people based on race or class or political affiliation, and if Zohran Mamdani wants to come on board, then he should drop the divisive rhetoric.' Mamdani, 33, a two-term Queens assemblyman, pulled off a stunning upset in Tuesday's ranked-choice Democratic mayoral primary, trouncing former Gov. Andrew Cuomo in first-pick votes after running an unabashedly socialist campaign focused on affordability. Advertisement The city's tangled property tax rules are the result of a 50-year-old court decision, a subsequent state law setting assessment caps to prevent middle-class owners from being taxed out of their homes and a complicated set of overlapping rules. 3 The proposal is a part of Mamdani's campaign platform in a call to fix the tax system currently in place in the Big Apple. The result is a system where 'small homeowners in Brooklyn and Queens can pay a higher tax rate than owners of luxury co-ops on 5th Avenue in Manhattan,' the pro-reform group Tax Equity Now points out. Tax Equity Now New York filed a still-ongoing lawsuit against the city in 2017 that argued the process unfairly taxes renters and homeowners in lower-income neighborhoods compared to wealthier areas. Advertisement Predominantly black neighborhoods such as Canarsie and East New York face higher effective tax rates than others that are largely white, a recent study by the Community Service Society found. 'There is no good reason why homeowners in Cambria Heights, a residential community that is 90% Black, should pay an effective tax rate that is double those paid by homeowners in Park Slope or East Village, which are 62% and 50% White, respectively,' the study states. The meat of Mamdani's proposal calls to remove artificial caps on assessments — a solution pushed by advocates and lawmakers across the political spectrum. 3 The proposal states, 'Shift the tax burden from overtaxed homeowners in the outer boroughs to more expensive homes in richer and whiter neighborhoods.' 'The Mayor can fix this by pushing class assessment percentages down for everyone and adjusting rates up, effectively lowering tax payments for homeowners in neighborhoods like Jamaica and Brownsville while raising the amount paid in the most expensive Brooklyn brownstones,' the proposal states. Mamdani's campaign didn't respond to The Post's requests for comment. But many New Yorkers in affluent neighborhoods weren't happy about their property taxes potentially going up. Advertisement Ron Centola, a 73-year old retiree, has rented on the Upper East Side for 30 years, but still opposes redistributing wealth. 'Here's the thing, I'm wealthy, I don't want my wealth redistributed,' he told The Post Friday. 'I work for my money, why should I give it away?' Another Upper East Sider — Shanice Gilbert, 33, a college assistant — noted not everyone in her hifalutin neighborhood is rich. Advertisement 'Not everybody here is wealthy, how is that going to work?' she said. 'It's a mixed environment, it's a very diverse environment. How are you going to do that?' Cam Macdonald, general counsel for the Empire Center, said as mayor, Mamdani could adjust the percentages, if he's elected in November. Keep up with today's most important news Stay up on the very latest with Evening Update. Thanks for signing up! Enter your email address Please provide a valid email address. By clicking above you agree to the Terms of Use and Privacy Policy. Never miss a story. Check out more newsletters But Macdonald argued Mamdani's campaign needs to show their math for how it will affect the city's revenue — of which more than 30% is derived from property taxes. Advertisement The proposal, he noted, also 'does nothing to fix the structural issues under state law that have led to the disparities.' Other planks of Mamdani's proposal — including 'circuit breakers' to make sure low- and moderate-income homeowners aren't burdened, and to stop treating co-ops and condos as if they were rentals — concede that the state legislature would need to make those changes, not the mayor. Kenny Burgos, CEO of the New York Apartment Association representing rent-stabilized apartment owners, has been an outspoken critic of Mamdani's promise to freeze rents on those dwellings. Advertisement But he said the issue of property taxes might be an area of common ground for his group and Mamdani. 'A reform of property taxes would be absolutely instrumental in saving this housing,' he said of rent-stabilized homes. 'On property taxes, I think he would have some strange bedfellows here. I think there are many many outer-borough elected officials who have this issue and have found not enough support to actually make meaningful change.' One Park Slope woman, who lives in a $3 million brownstone, told The Post she agrees with Mamdani even if her 'modest' $5,000-a-year taxes rise. 'Private homeowners have a real deal,' she said. 'I think people in co-ops and condos get hammered. I'm all for it. People got to share.' — Additional reporting by Khristina Narizhnaya, Georgett Roberts and Mikella Schuettler
