Developers and real estate investors in New York City spent millions of dollars and several months hoping for any political scenario except this one.

The industry awoke Wednesday morning to learn that state Assemblyman Zohran Mamdani, a Democratic Socialist, won the Democratic mayoral primary in a landslide over its preferred candidate, former Gov. Andrew Cuomo. 

NYC mayoral candidate Zohran Mamdani in November 2024.

In a sign of how damaging Wall Street thinks Mamdani's policies would be toward the city's property sector, publicly traded landlords with NYC concentrations saw big dips in their stock prices on Wednesday. SL Green’s stock was down by 5.7%, Vornado Realty Trust’s stock was down 6.7%, and Empire State Realty Trust dropped more than 7.5%.  

“Everybody’s up in arms because everybody thought that Cuomo would do a better job,” said Gregory Kraut, co-founder and CEO of real estate investment manager KPG Funds. “People are nervous.”

Gary Barnett, Extell Development founder and chairman, said at a Bisnow event Wednesday morning that Cuomo’s track record upgrading New York’s infrastructure — from LaGuardia Airport’s makeover to the new Moynihan Train Hall at Penn Station — clearly wasn’t enough to sway voters.

“Cuomo is a fixer,” Barnett said. “Not that it got him anywhere last night.”

Mamdani campaigned on freezing the rent of the city's 1 million stabilized units for all four years of his term, borrowing $70B to develop city-owned affordable housing, and opening government-run grocery stores. 

Cuomo's super PAC brought in millions in real estate donations and ran ads attacking Mamdani — who would be the city's first Muslim mayor and has called Israel's war in Gaza a genocide — as extreme, antisemitic and out of touch with reality. His shock primary victory made it clear that the gulf between what voters and the industry believe is needed to create housing affordability is only widening.

“Based on candidates’ campaign platforms, in November voters will need to choose between practical or fanciful and extreme ways to continue the drop in crime, build much necessary housing and create good jobs,” Real Estate Board of New York President James Whelan said in a statement. “REBNY will continue to focus on data-driven policy analyses and proposals and urge candidates to do the same.”

Affordability was clearly the key issue for voters, New York Housing Conference Executive Director Rachel Fee said. But as much as New Yorkers are struggling to keep up with record-high rents, the NYHC is opposed to Mamdani’s proposed rent freeze.

“Renters, like so many of the rent-stabilized households, are already paying more than they can afford. We know that through the data, but we also know that there's a subset of rent-stabilized buildings that are really struggling to stay above water and to cover their operating expenses each month,” she said. “Positions on rent-stabilized housing have to be more nuanced.” 

Mamdani's win has left some owners and investors in NYC’s commercial real estate industry recalibrating largely in silence. The industry’s concerns range from a potential mass exit by businesses and high net worth individuals, which make up a crucial part of the city’s tax revenue, to the growing gulf between what voters and business leaders believe will solve NYC’s affordability crisis.

“There's an old saying in real estate: Money goes where it's welcome,” said John Boyd Jr., principal of Florida-based corporate site selection specialist The Boyd Co. 

Mamdani’s name has been coming up in conversations Boyd has had with developers for months, with many weighing whether or not to do business in NYC as a result, he added. 

Tuesday night’s results have already sent shockwaves through the ranks of the wealthy looking to buy or sell NYC apartments, said Briggs Elwell, co-founder and CEO of consultant RLTYco.

“I've heard firsthand today some aggressive stories of buyers pulling out, people calling and wanting to list their apartment — on a much more rapid pace than they were in previous weeks,” Elwell said, adding that the residential market is likely to be more reactionary than the commercial market.

In the hours after the victory, many in real estate predicted South Florida would once again benefit from a wealth exodus out of New York, just as it did during the pandemic. Developers and investors are rubbing their hands together after the results, said Eric Benaim, founder and CEO of New York-based Modern Spaces, who has been carving out a niche in South Florida.

“A lot of my friends now in South Florida are like, ‘It's going to be booming in South Florida,’” Benaim said. “If Zohran ends up winning, I think it'll be the biggest exodus of New Yorkers to South Florida since Covid.”

Cuomo is reportedly considering whether to run as an independent, and Mayor Eric Adams plans to formally announce his reelection campaign as an independent Thursday afternoon.

The business community is hoping support will coalesce around one or the other, rather than split moderate votes and hand the mayoralty to Mamdani. And after Cuomo's decisive loss, many are expecting to line up behind the incumbent, despite the bribery scandal that prompted Adams to drop out of the primary.

“I think everybody needs to get behind Eric Adams now, to be perfectly frank, and hopefully Eric Adams can win in November,” Benaim said.

New York City Mayor Eric Adams is running for reelection as an independent after winning as a Democrat in 2021.

Business leaders are looking for a candidate whose experience will help them navigate the complex bureaucratic and political machinery required in the nation's biggest city. Ensuring agencies are able to attract and retain talent is crucial and must improve under the next administration, said Suri Kasirer, president of New York lobbying and government relations firm Kasirer.

She pointed to the Department of Housing Preservation and Development’s 14% staffing vacancy as an example of Adams' shortcoming in that regard, but she also cautioned that Mamdani still needs to seek solutions outside of government.

“City agencies provide such tremendous value and do essential work day in and day out,” she said. “The public sector must commit to working with the private and nonprofit sectors to move the city forward and support its residents.” 

Not everyone was sounding the alarm. Luxury residential developer RAL Cos., a 45-year-old family firm, has no plans to leave the city, President Spencer Levine said. 

“A massive, complex organism like New York City doesn't pivot with that kind of nimbleness, that we wake up tomorrow and it's an anti-business environment,” he said. “There's hopefully a rational implementation of ideas and ideals that make this city richer as an organism moving forward.”

Malik Yoba, CEO of Yoba Development, is another housing developer who isn’t planning on backing away from the five boroughs, even if it gets a little harder to do business.

“I think it’s a wait, see and watch thing,” he said, adding that he is keen to build relationships with whoever ends up in Gracie Mansion.

More than anything else, it’s the unknowns that have sent the industry scrambling, Kraut said. It is unclear what role NYC’s CRE industry will play in the city if Mamdani wins in November, he said, leaving the industry with a monthslong limbo before anyone can act decisively.

“I would certainly not look to buy anything now, until there’s more certainty,” Kraut said. “It’s the lack of certainty that kills CRE. You can’t model for the unknown. This guy is the unknown.”

Sasha Jones contributed to this story.