New York City, characterized by its ability to endure myriad challenges, has weathered storm after storm, from the fiscal crisis of the 1970s to Black Monday back in 1987, further on to the Crown Heights violence of 1991, the appalling terrorist attacks on 9/11, the 2008 Financial Crisis, and the controversial eight-year tenure of Bill de Blasio. Its resilience is now set to be tested under the leadership of Zohran Mamdani, post his potential victory in the recent mayor elections. Under his governance, the city will face multiple challenges; the worry is identifying how taxing these coming days are going to be.
Let’s go through these potential challenges individually, initiating with the most significant issue on hand – that of rent-stabilized buildings. Mamdani’s principal assurance in his campaign was a pledge to freeze rent prices. Of course, this was primarily referring to rent-stabilized units, which comprise approximately half of the city’s rental landscape. These spaces were already grappling with low rental increments not keeping pace with inflation over the last decade, only exacerbated by the near-cessation of deregulation since 2019.
The housing situation gets murkier with the fact that most residential units in buildings developed before 1974 also fall under the purview of rent stabilisation. Moreover, this categorisation extends to several units housed within affordable housing schemes and those in buildings benefitting from the 421a provision. Although Mamdani, as Mayor, may not have the absolute authority to determine rental prices, how will his key appointees to the Rent Guidelines Board operate?
The board, once completely constituted with all nine members appointed by the mayor, will hold substantial power. The key concern arises – will they proactively operate on the basis of tangible data and the current legislation, or will they lean towards mayoral decree? There may not be a clear-cut answer yet, but past practices under de Blasio’s administration give an indication. The appointed board was primarily driven by executive decisions, with the mayor’s recommendations largely dominating the board’s rulings.
Despite Mamdani’s purported belief that the profits of rent-stabilized buildings have been on a positive trajectory, and his assertive statement that more struggling property owners would have applied for governmental financial aid schemes if the situation was dire, he will soon realise the inefficacy of many such programmes. The industry’s rationale moving forwards is likely to be seeking relief from Albany, especially with several new legislators and Governor Kathy Hochul appearing more understanding of their predicament.
That said, the political climate is dynamic, and the unexpected victory of Mamdani could cause a palpable shift in the state’s legislative attitude towards landlords. It could potentially discourage lawmakers to decelerate the pace of their assistance, particularly given that 2026 will also be an election year. Meanwhile, tenants in rent-stabilized buildings could see their financial stress increase.
New York City’s apartment construction projects have been underperforming due to limited benefits under the property tax relief provided by the state. These inadequacies are largely attributable to a mandated wage scale, championed by unions that becomes applicable when developments exceed a threshold of 100 units. Frustratingly for the industry, Mamdani’s likelihood of petitioning Albany to loosen these wage constraints appears slim.
An encouraging indicator is Mamdani’s apparent change of heart towards private real estate development which he now considers indispensable in addressing the housing shortage in the city. Notwithstanding, the exigency of affordable housing may cause him to stick to affordability regulations that could suppress the annual housing production quantities well below the necessary 50,000 units.
Aligned with his socialist ideology, Mamdani appears to favor government initiatives. This aligns with the real estate industry to an extent, contingent on the jurisdiction’s policies servicing property owner interests. However, there exists a fair share of policies that currently do not. An agenda that Mamdani is pushing is the notion of upzoning protean locations, especially in affluent neighborhoods, and dismissing compulsory parking rules for projects, which could benefit developers and landowners.
This strategy, however, doesn’t come without its challenges. Upmarket locations often consist of historic districts, where edifice heights are regulated by the Landmarks Preservation Commission, effectively increasing the cost of construction, and are less likely to support constructions that don’t fit the traditional aesthetics of the neighborhood. All commissioners serving the Landmarks Preservation Commission are appointed by the mayor, but it remains to be seen if Mamdani would consider leaning towards a pro-development stance.
Even if he champions a more pro-development strategy, it’s likely that various legal roadblocks posed by preservationists would impede any swift decisions. However, there are numerous zones unencumbered by landmark status that could feasibly be rezoned and have car parking requirements lifted, including areas where Mamdani holds considerable sway, like in Bushwick and Western Queens.
Capability and effectiveness in governance will require Mamdani to balance two poles of public perception – an acceptance of capitalism, on which the city’s tax revenue is fundamentally contingent, and the assurance to citizens that he isn’t lax about crime. He conveyed glimpses of this during his tenure, albeit subtly.
Finally, taxation is a significant point of contention between the industry and Mamdani. His inclination towards raising taxes does not sit well with a sector already burdened by them. However, ultimate control over taxation rests with Albany, and it’s highly unlikely they would entertain tax hikes up to and during an election year. Nonetheless, under a Mayor Mamdani administration, stakeholders and citizens alike are bracing for uncertain, potentially tumultuous times ahead.