The Wall Street Journal: NYC Developers Gripped by Hysteria After Mamdani’s Sudden Rise

By Rebecca Picciotto and Peter Grant | The Wall Street Journal | June 26, 2025

Paul Rahimian, CEO of Parkview Financial, shared his perspective in The Wall Street Journal on what the proposed changes to rent regulations in NYC could mean for real estate developers and for lenders like Parkview. We’re continuing to keep a close eye on the market and staying thoughtful in our approach.

Read the full article below, originally published by The Wall Street Journal.

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New York City’s developers and landlords are in a mad scramble to block from City Hall the socialist who wants to freeze rent.

Zohran Mamdani struck fear across the business community after his Tuesday night surprise victory against former New York Gov. Andrew Cuomo, who conceded in the city’s Democratic primary for mayor. In the days since, phones across the real-estate industry are ringing almost nonstop as panicked executives scrape together their contingency plans.

Most want to back the more business-friendly incumbent, Eric Adams, who is running for mayor as an independent, or draft another candidate for November’s general election. 

Others are making preparations in the event he does become mayor, like lobbying state lawmakers to serve as a brake on parts of Mamdani’s housing agenda. Some say they will simply flee the city if that happens. 

“We’ve got to do something,” said Greg Kraut, chief executive of New York office landlord KPG Funds. 

The real estate hysteria is an early sign of just how hard Mamdani will have to work to win over New York’s economic establishment, while maintaining the support of young, economically frustrated voters who fueled his primary campaign.

Financiers and other business people in the city fear that Mamdani, a democratic socialist, will be antagonistic. But few find themselves as directly in his crosshairs as apartment building owners. 

Mamdani is pushing for a host of housing changes to try to ease costs for renters. While he seems to have softened his stance toward working with private developers more recently, at the top of his list is still a controversial rent freeze on the city’s roughly 1 million rent-stabilized apartments. 

Landlords say this would suffocate their operating revenue and kill new investment to the city, even though the law wouldn’t apply to newly constructed housing units. 

They are already dealing with the pressure of a 2019 law that capped rent increases on stabilized units and is projected to cost the city up to $2 billion in property tax losses annually, according to the Real Estate Board of New York, the industry trade association. 

A Mamdani administration “would be the death penalty for the city,” said Danny Fishman, CEO of real-estate investment firm Gaia Real Estate. “And it would be the best thing to happen to Miami and Palm Beach since Covid.”

Fishman said he is exiting the New York market and expanding in Florida. Miami real-estate agent Danny Hertzberg said he received nonstop calls and texts from New York clients in the finance and real estate community after Mamdani’s victory.

“I have active clients who have been on the fence about leaving New York,” said Hertzberg, founding member of the Jills Zeder Group. “They’re calling me to say that this may be the straw that broke the camel’s back.” 

The rent freeze proposal has cast a shadow over Mamdani’s other housing plans that tend to be favored by the industry, such as expediting land-use reviews, opening public land for development and rezoning for more residential projects.

Developers are also thinking about how to get Mamdani to moderate his platform. Nonprofit developer Bart Mitchell plans to double down on the New York market even if Mamdani is elected. Policies like fast-tracked reviews, reduced parking ratios and more affordable housing resources “are exactly the things that make it possible to develop,” he said.

The city’s most recent report about rent-stabilized units says landlords’ profit was up 12.1% between 2022 and 2023.

Mamdani’s rent freeze proposal is already triggering alarm bells in the stock market. Shares of big office owners, such as SL Green Realty, BXP and Vornado Realty Trust, plummeted on Wednesday on news of Mamdani’s win, though they made up much of those losses on Thursday.

Shares of Flagstar Financial, the embattled regional bank with heavy exposure to rent-stabilized multifamily properties in New York, have dropped roughly 5% since last week.

Paul Rahimian, chief executive of the private real estate lender Parkview Financial, said his firm may take a more cautious approach in the New York market over the next few months. 

“We might think twice” about certain deals there if regulations were to change, he said. 

Those who want to stay are opening their checkbooks and shopping around for a new candidate to rival Mamdani in the November general election. Kraut of KPG Funds said he plans to set up meetings with Adams and the head of the Republican Party to find “another viable path” instead of Mamdani.

“You’re going to see a ton of money coming into the race from all levels literally against this one person,” said Kraut. 

If Mamdani wins, the real-estate industry will take the fight against policies like tax increases to state lawmakers in Albany, said New York developer Scott Rechler.

“We would actively work to make sure the state was muscular in protecting the long-term values and vitality of the city,” he said.

Kenny Burgos, the head of the New York Apartment Association, one of the city’s largest landlord trade groups, said he is turning to social media. He spends hours each day making TikTok and Instagram videos and going on radio and television shows to speak out against harsh rent regulations. He also started his own podcast. 

“I’ve taken the approach that I’ve found to be most successful,” said Burgos, who went to high school with Mamdani and served in the state assembly with him. “It’s social media.” 

Real estate leaders held an emergency postmortem on Wednesday organized by New York City power broker Kathryn Wylde to discuss supporting another candidate in the November election. About 15 people participated representing some of the city’s largest real estate and financial businesses, Wylde said. 

The room was deeply worried about the prospect of Mamdani as mayor but no decision was made on how to proceed, according to a person at the meeting. 

Not everyone in real estate is in crisis mode. Some are open to finding common ground.

“There’s an opportunity to do effective real estate deals with Mamdani,” said Travis Terry, a consultant who in part advises real-estate developers on how to work with the New York City government. “The key thing will be who he surrounds himself with.”

Rebecca Picciotto and Peter Grant

www.wsj.com