Businesses and markets panic over the imminence of socialist Mamdani as mayor of NYC

New York dawned Wednesday with an election result that shook the business class: socialist Assemblyman Zohran Mamdani emerged as the virtual winner of the Democratic mayoral primary, leaving behind former Governor Andrew Cuomo and positioning himself as the leading contender to succeed incumbent Mayor Eric Adams in November.

The real possibility that Mamdani, a 33-year-old self-described democratic socialist, will govern the nation's most influential city has generated a wave of concern on Wall Street, in real estate, and among business leaders. Kathryn Wylde, director of the Partnership for New York City and a traditional voice of business, admitted that many are "terrified" at the prospect of an openly anti-capitalist mayoralty.

Markets react with nervousness

The effects were immediate. The New York real estate market reported widespread declines: Vornado Realty Trust and SL Green, two of the largest building owners in Manhattan, lost more than 5% of their value in a single day. Other trusts linked to the sector, such as Equity Residential and Empire State Realty Trust, also suffered setbacks.

The main concern centers on one of Mamdani's star promises: freezing rents on all rent-stabilized apartments. Analysts at banks such as Citi, Barclays, and Mizuho warn that this policy, coupled with high maintenance costs and the lingering effects of remote work, could accelerate capital flight, discourage investment and further pressure the sustainability of real estate lending.

"Politicians continue to march down a perilous path for rent-regulated multi-family with allowable rent increases lagging expense growth," brokerage firm Stephens also opined.

Reactions: from skepticism to exodus

Bradley Tusk, former campaign manager for Michael Bloomberg, warned that "If you have a super high-profile socialist mayor creating all types of new government entitlements, taxes, you know, big anti-capitalism sort of campaign…that reverberates everywhere, and that generally puts pressure on markets." He compared the situation to the path of decline experienced by cities like Detroit and Baltimore.

On social media, some investors were even more blunt. Jim Bianco, a macroeconomic strategist, wrote, "It appears that NYC is electing to commit suicide by mayor."

"Zohran effect" spreads to Florida

As the possibility of Mamdani becoming mayor grows, talk has begun of the "Zohran effect": a phenomenon already impacting investment decisions, real estate markets, and the migration patterns of the more affluent.

Realtors like Ryan Serhant reported immediate cancellations from clients interested in buying Manhattan real estate. "My number one job will be moving people from New York to Florida," he said. According to Serhant, several high-profile buyers are pausing their investments or looking at properties in destinations such as Palm Beach, Milan, or even Uruguay.

Nathan Zeder, another realtor, confirmed an uptick in interest in moving south. "The amount of lifelong New Yorkers texting me [about a move to Florida] is close to shocking," he said.

Even Florida Gov. Ron DeSantis weighed in on the issue, asserting that a Mamdani win would only accelerate the exodus of wealthy residents to the Sunshine State. "As bad as Bill de Blasio was, this guy is gonna be way, way worse," he declared.