July 24, 2025
In what’s now being dubbed the “Zohran effect,” New York City’s real estate market felt an immediate shock this week as shares of major developers and banks with local real estate exposure tumbled.
The drop followed growing fears among investors that Zohran Mamdani, a Democratic Socialist and vocal advocate for a citywide rent freeze, could soon take over City Hall.
REITs like SL Green and Vornado Realty Trust — two of the largest property holders in NYC — saw stock prices fall more than 5%. Empire State Realty Trust and Equity Residential also took hits, dropping 3-4%.
Banks heavily tied to NYC’s rent-stabilized housing market, like Flagstar and Dime Community, weren’t spared either. Analysts estimate that Flagstar alone has up to $18 billion in multifamily loans at stake if a freeze becomes law.
Mamdani’s proposal — to freeze rents on all rent-stabilized apartments — has triggered alarm in the real estate investment world. Owners already struggling with rising operating expenses, stricter rent regulations, and higher interest rates fear that such a freeze would put even more pressure on their margins. For landlords, the gap between rising costs and capped rents continues to widen.
It’s not just buildings and banks feeling the heat. Wall Street analysts suggest that Mamdani’s win could cool corporate hiring and leasing activity in the city, further impacting office demand — which is already in decline due to remote work trends.
That’s particularly bad news for firms like SL Green and Vornado, which hold the majority of their portfolios in Manhattan commercial real estate.
While some experts caution that the long-term investment picture isn’t necessarily doomed — current laws already constrain rent hikes to below inflation in many cases — the uncertainty is enough to scare off short-term investors.
Meanwhile, politicians from outside the state, like Florida Governor Ron DeSantis, are using this moment to once again pitch the Sunshine State as a haven for NYC’s fleeing wealthy class.
Whether Mamdani’s rent freeze becomes a reality remains to be seen. But the sharp sell-off in real estate stocks this week shows just how sensitive this market is to politics — especially when policy proposals directly threaten owner revenues.
Disclaimer: This content is meant for informational purposes only and is not intended to be construed as financial, tax, legal, or insurance advice.
