No one leaving New York because of Mamdani, say top real estate CEOs

New York Mayor-elect Zohran Mamdani’s views have sparked fears that there will be an exodus of companies and capital from the city. But two of the city’s top commercial real estate executives say it’s simply not true, based on leasing activity and new building investments being made, with no pullback in plans ever since it became clear Mamdani would win, and through the democratic socialist’s official election.

“New York City is back,” said Scott Rechler, CEO of RXR Realty, at CNBC’s Delivering Alpha conference in New York on Thursday. “The people who work here, live here, they feel the energy, they have the conviction, and they have every right,” he said.

“In our business right now, we are seeing CEO after CEO committing to the city,” Rechler said. “We’re seeing a record level of leasing in office buildings. And it’s not just for next year, it’s for 2028, 2030, 2032,” he added.

“We will hit over 40 million square feet in commercial office leases signed at the end of this year,” said Bill Rudin, co-executive chairman of Rudin Management. “Companies are growing here,” he said. “We haven’t seen any diminishment in meetings with brokerage firms,” he said of activity since Mamdani’s election. “People keep saying, ‘Any impact?’ No one has put their pencils down. No one is calling the moving trucks. Companies are expanding and taking space,” Rudin said.

One good example: hedge fund billionaire Ken Griffin of Citadel Securities, who is known for being outspoken with his conservative political views. Rudin, along with Steve Ross, Vornado Realty and Griffin, is breaking ground on a two-million square foot new office building at 350 Park Avenue. “Ken is committed and will have more employees at 350 Park than in Miami,” Rudin said. And while the plans pre-date Mamdani’s rise, Rudin noted they recently filed for a building permit and Griffin is a partner in the project, “so he is moving ahead and very excited about it and very much involved in the design and development of the project. … How’s that?” Rudin added.

RXR Realty just signed a 300,000-square-foot lease with a law firm moving in 2029, and Rechler noted that the firm came back last week after the election and said they need to expand by another 200,000 square feet. JPMorgan’s new building already needs seats for another 5,000 workers beyond the 10,000 it already can hold.

Rechler noted his firm already has an anchor tenant for a 2.8-million-square-foot project that will replace a Hyatt hotel in the 2031-2032 timeframe. “People believe in New York,” he said. RXR has $7 billion in project financing and “you don’t get that if people don’t believe in the future of New York,” he added, though he said it may require “a little bit of a longer lens.”

But even right now, he said, in the wake of Mamdani’s election, the correct word to use with tenants in the high quality office space market is “urgency” to sign deals, with reports he is hearing of companies signing leases that would normally take them a year to agree to within 21 days. “That’s the market. … enormous pipeline on the office side I’ve never seen my whole career, never seen it as strong as it is right now in tenant demand,” Rechler said.

“As of today and yesterday, the information we are getting in real time is that tenants are still in the market and looking for good high quality space,” Rudin said.

One reason for the bullish outlook on New York’s real estate market is the need to attract and retain young professional talent.

“The people they want to be working in the companies are here in New York City,” Rudin said.

“Every young professional wants to be in New York,” Rechler added, citing a 1.5% vacancy rate in the multi- family property real estate market in the city. “People want to be here,” he said.

Their view of the mayor — both real estate executives have met with him — isn’t without reservations.

“Mamdani is not necessarily consistent with the capital of capitalism,” Rechler said. “That’s the biggest risk. We have a guy who is caricature, not a character, but a caricature,” he said, and that could set Mamdani up to easily be defined as a socialist with no experience and just riding on social media savvy, he added.

It is a risk that Rechler says he is seeing play out among overseas institutional investors specifically. “When I leave the city and travel the world, they all have this big anxiety,” he said. “It may impact foreign investors in multi-family projects in New York. They hear ‘rent freeze,’ just hear that word … and maybe there is a pullback there,” Rechler said, citing the fact that the mayor has power to appoint officials to a board overseeing those policies.

That perception is leading some institutional investors with whom RXR was talking about large investments in New York City to “pull back and say they want to see how it plays out,” Rechler said. He added the tone of these conversations implies that there could be a “chill in capital flows” among these investors.

“I’ve been in the Middle East and Europe and the first thing people want to talk about is Mamdani,” he said. Rechler is also on the board of directors of the New York Fed, and he said the topic of conversation is the same. “In the boardroom of the New York Fed they want to talk about it and their staff traveling around the world is being asked as they travel.”

But the real estate CEOs both stressed that for a city that has survived and prospered through Covid, the financial crisis, 9/11 and the administration of Bill de Blasio, the fears seem hyperbolic. They also noted that when Michael Bloomberg was mayor, New York had a $60 billion budget. Now it is a budget of $116 billion, which leads them to believe Mamdani may become more realistic in his management approach than his campaign platform would suggest.

“When he first started running, there was no private sector in housing. He has moved off of that,” Rudin said. He added that a “very liberal Greenwich Village congressman Ed Koch” realized when he became mayor he needed to move to the center to get things done. “Hopefully, Mayor-elect Mamdani understands he needs to manage and operate a $116 billion budget,” he said.

Rudin said the issues the Mayor-elect has raised, such as housing affordability and availability, are legitimate issues, “and we will try to work with him,” he said.

“What’s driving Mamdani’s success is the same thing that drove Trump’s success,” Rudin said, citing a disenfranchised segment of the economy, particularly among younger people, who feel they will not have the same economic opportunities as prior generations. “There is frustration with big business and government and they want an answer,” he said. “Now, the Mayor-elect gave them a simple answer, which frankly is not really executable,” he said.

But Rudin noted since Mamdani’s earlier campaigning, he has pulled back from a policy of having government wholly dictate housing, and has expressed willingness to work with the private sector, and he added, it is now “incumbent on us to show him the pathway of how to create the housing we need.”

“I talked to him before the election,” Rudin said. “My sense is a very smart young man willing to listen and hear feedback on the issues.”

The housing affordability crisis will not be a simple one to fix. Rudin noted that the administration of Mayor Eric Adams set up Mamdani for success by changing zoning laws across boroughs within the last year, but the real estate executives both said wage, labor union, sustainable development policies, and changes in tax provisions that make it less attractive financially to put up buildings over 100 units are all issues that stand in the way. “So it has to be a moment where labor, the governor, the city council, and the mayor have to come together … if they want the housing, and we need it,” Rudin said.

The real estate executives cited tax incentives created due to Covid which are allowing for the conversion of older office buildings into residential properties as another area where they can collaborate on affordable housing construction, with those incentives tied to buildings retaining 25% of units for affordable rents rather market rates.

Rechler noted that despite Mamdani’s tax the rich rhetoric, the reality is that New York’s governor has had significant fiscal authority over the city ever since the 1970s financial crisis. “At the end of the day, the governor has the veto pen on taxes,” Rechler said. “And I had breakfast with her yesterday and she said income taxes won’t be raised under her watch.”

He added there will be political pressure on Governor Kathy Hochul given her own election needs.

“We have a governor’s race in a year and she has to serve as that firewall, and if she doesn’t, she will not be governor in a year,” Rechler said. “The gubernatorial election will be about Mamdani.”

For now, Rechler said what is maybe most telling about his interactions with Mamdani are a comparison to with how former New York City Mayor Bill de Blasio interacted with business leaders when his star was rising.

“I met with [Mamdani] for an hour alone and he came in prepared and he was pivoting from campaign to governing mentality and said all the right things,” Rechler recalled of a meeting in September when it was clear to him the election outcome was certain. “The proof will be in the pudding, but he realizes that he needs to lean into public-private partnerships, it’s the only way to build the type of housing he wants.”

“I want to contrast that with when I met with de Blasio,” Rechler added. It was a meeting of 12 business leaders, he said, and the former mayor, “he looked around the table of business people and said ‘none of you elected me and I’m not here to serve you.’ And we lived with that for eight years. This guy at least starts with ‘I know I need business people to work with to be successful.”