NEW YORK (Reuters) -Business leaders in New York City voiced concerns on Wednesday, following progressive Democrat Zohran Mamdani’s likely victory in the city’s hotly contested primary for mayor the day before.
New York, the nation’s preeminent financial center, boasts an annual GDP of more than $1 trillion and more residents than any city in the nation – many who are struggling with the high cost of rent, health care and groceries.
Those concerns motivated voters to come out in early voting, and in 100 degrees Fahrenheit heat (37.7 degrees Celsius) on Tuesday for the 33-year-old Mamdani, a self-described democratic socialist who finished first in the city’s initial round of ranked-choice voting ahead of the frontrunner, former New York state governor Andrew Cuomo. Final results of the city’s ranked-choice system will not be known for a couple of weeks.
Mamdani campaigned on freezing rent, free buses, and subsidized groceries, policies that business leaders say may not solve the affordability crisis and could push many to leave the city under threat of higher taxes. He has also called for a higher minimum wage and a new office to promote small businesses.
“Think about how crazy this situation is. A man who prides himself on being a socialist has a real shot at becoming the mayor of the heart of the global financial system,” said Anthony Pompliano, founder and chief executive officer at Professional Capital Management, and one of the biggest investors in cryptocurrencies. “Irony doesn’t even start to describe the situation.”
Mamdani did not respond for immediate request for comment.
He will still have to win November’s general election against current Mayor Eric Adams who is running as an independent and Republican Curtis Sliwa, who lost to Adams in 2021. Cuomo may also run in the general election as an independent.
Mamdani’s promise to freeze rent resonated particularly in Manhattan, where the median monthly rent for an apartment sits at a record $4,571. A renter typically must earn 40 times the rent. As mayor, Mamdani would be able to appoint members of the city’s rent guidelines board. Apartment owners say such a move would make buildings unlivable.
“A four-year rent freeze all but ensures these buildings completely crumble,” said Kenny Burgos, chief executive officer of the New York Apartment Association, which represents several thousand property owners and managers. “I sympathize with folks who have an issue with the cost of rent and the lack of affordability, but there’s a conversation to be had on policy that doesn’t ignore the cost.”
Shares of New York-based banks exposed to real estate fell on Wednesday, with Flagstar Financial and Flushing Financial, down 3.8% and 3.4%, respectively.
As of May, Manhattan’s median rent was up 7.6% from a year earlier, up 6.6% in northwest Queens, and is at a record in Brooklyn, according to real estate company Douglas Elliman.
“I’ve lived in New York since 1990; it’s only gotten worse for what it costs,” said Marc Chandler, chief market strategist at Bannockburn Capital Markets. “Most young people I know have to have roommates.”
Mamdani also campaigned on subsidized grocery stores, which drew opposition from store owners.
“If he opens stores and gives the product away for nothing on the city’s budget, how do you compete with City Hall? People walk in, take what they want, they don’t pay,” said John Catsimatidis, a Republican donor and CEO of New York-based grocery chains Gristedes and D’Agostino Supermarkets.
Mamdani, if elected, would have to also contend with the city’s dwindling operating budget surplus, which has been falling as the city’s workforce shrinks due to retirees and people leaving the city, according to New York’s independent budget office.
Whitney Tilson, a hedge fund executive who also ran for mayor but attracted little support, said that Mamdani was “totally unqualified to be mayor of one of the world’s largest, most complex cities,” and predicted that Adams would drop out and support Cuomo in an effort to defeat Mamdani.
Hedge fund managers Bill Ackman and Daniel Loeb blasted the outcome on social media following the results, with Loeb reposting a meme about Florida real estate agents laughing in delight.
Chandler dismissed the idea of a mass exodus. “If I had a nickel for every time I heard that, I wouldn’t have to work anymore.”
(Reporting by Samantha Marshak in New York; additional reporting by Gertrude Chavez and Svea Herbst-Bayliss; Editing by David Gaffen and Diane Craft)
Comments