Shares of several New York-based banks and real estate investment trusts fell on Wednesday as Zohran Mamdani’s lead in New York City’s Democratic mayoral primary stoked concerns that his proposed rent freeze could pressure building owners.
On the campaign trail, Mamdani, a 33-year-old state lawmaker and self-described democratic socialist, vowed to lower costs for New Yorkers as a mayor by freezing the rent, opens new tab for all rent-stabilized apartments.
Wall Street analysts have warned that the move could hurt building owners already grappling with higher costs, as constraints on their ability to raise rents might make it more difficult for some to repay their debt.
“Politicians continue to march down a perilous path for rent-regulated multi-family with allowable rent increases lagging expense growth,” brokerage Stephens said.
The real estate sector has already been reeling under pressure as higher interest rates strained borrowers while the post-pandemic adoption of remote working left office buildings vacant.