The NYC Landlords Most Worried About Zohran Mamdani

Probably the most controversial proposal from New York City Democratic mayoral nominee Zohran Mamdani is his promise to freeze the rent on a substantial chunk of rent-stabilized units in the city. There are concerns that this will cause a major downshift in housing development and that landlords that are heavily exposed to rent-stabilized units will be driven deeper into distress. But then separately there are major real estate owners who may be threatened by other aspects of Mamdani's real estate vision. For example, he has promised to, in some instances, expedite approvals for new buildings, which could take away the competitive edge from major building owners that know best how to work the approval process. But there are also players in the real estate industry who are excited about new opportunities. If housing production does, in fact, slow down, that could mean higher rent on market-rate units. And if Mamdani significantly expands the supply of free childcare in the city, then that could present an opportunity for some owners of commercial real estate. On this episode of the podcast, we speak with past guest Ben Carlos Thypin, a NYC landlord himself, as well as the founder of the analytics firm Quantierra. He gives us the overall lay of the land on how various players in the real estate industry are preparing for Mamdani's possible victory. Read More: Mayor Eric Adams on the Future of New York CityOnly Bloomberg.com subscribers can get the Odd Lots newsletter in their inbox — now delivered every weekday — plus unlimited access to the site and app. Subscribe at bloomberg.com/subscriptions/oddlotsSee omnystudio.com/listener for privacy information.

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• 2:33Joe Weisenthal?

  Hello and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

• 2:37Tracy Alloway?

  And I'm Tracy Alloway.

• 2:39Joe Weisenthal?

  Tracy, I don't want the podcast to be like an entirely New York City focused podcast. But like in our defense, not only do we live here, but you know, what happens in New York City? It has, it has problems and it has challenges that are seen really all around the world. So it's not terrible to do a few episodes related to, you know, what's happening around in our neighborhood.

• 3:01Tracy Alloway?

  I don't think it's terrible at all. And in fact, one specific area where New York really does have national, maybe even global relevance is in the housing arena.

• 3:11Joe Weisenthal?

  Yeah.

• 3:12Tracy Alloway?

  Right? So we know New York City has a shortage of housing. People have been trying to come up with ways to improve that, build more supply for a long time, and also lower rents. And so that, that has, you know, implications for a lot of other cities and places that might also be capacity constrained.

• 3:30Joe Weisenthal?

  Totally. I mean, like, New York is sort of at egregious levels of housing unaffordability, but every city around the world, I think, every city that's booming has some challenges of affordability and building more, at least in the West. But I sort of think basically everywhere. And so, you know, people always talk about trying to solve it, et cetera. Anyway, of course, past Odd Lots guest, Zohran Mamdani, has his proposals for how to address housing affordability, including a rent freeze on a significant chunk of the housing stock in the city. And so we sort of need to get a sense of like what that means and how that, you know, what the implication is for business. Weather could work, you know?

• 4:15Tracy Alloway?

  Well, the broader theme here, I guess, is the role of the public sector

• 4:19Joe Weisenthal?

  Yeah.

• 4:19Tracy Alloway?

  in the private market, right? Like, if we want to get really, really conceptual with this, that's basically what we're talking about.

• 4:25Joe Weisenthal?

  Yeah, and of course, Mamdani has a slew of proposals and ideas, free buses, faster buses also, his public grocery store trial, et cetera. But you know, we did that recent episode with Kathy Wilde, the head of the Partnership for New York, which represents a lot of major employers in the city. I'm sure they're anxious about him for a number of reasons, but she said within their community, it's really the real estate industry that is the most freaked out, so to speak.

• 4:54Tracy Alloway?

  Yeah, and I'm really interested in this because people talk about the real estate industry as the sort of monolith, but of course it isn't, right? There's residential, there's commercial, there's luxury, there's more affordable. So I want to dig into this a bit more and understand exactly what the concerns are and whether they're coming from different parts of the real estate network.

• 5:16Joe Weisenthal?

  Yeah, and then there's, you know, even within real estate, there's brokers and then there's developers who are separate from landlords, et cetera. Anyway, we do have the perfect guest, someone we've had on a few times. Every time New York City real estate is in the news, a guy we like to chat with. We are going to be speaking with Ben Carlos Typer. He is the founder of a firm called Quantiera, which analyzes real estate. He is also a New York City landlord and broker. Interesting ideas.

• 5:43Tracy Alloway?

  Is that the most like hated demographic in all of New York?

• 5:47Speaker 06

  Yes.

• 5:50Joe Weisenthal?

  Thanks for coming back on the show, Ben.

• 5:52Speaker 06

  Thanks for having me.

• 5:53Joe Weisenthal?

  Kathy Wilde, when we talked to her, did say that the real estate industry is the, of all of the sectors of the economy, the most anxious. What specifically, you know, who's really anxious or what about Mamdani's sort of vision most sends chills down the spine of landlords or other players in the real estate industry?

• 6:16Speaker 06

  Well, I mean, I think the reaction to Mamdani is actually not that different from the reaction to Bill de Blasio eight years ago when he came in, or excuse me, 12 years ago. I think it's been amplified by, you know, the political environment we're in, Mamdani's political identity, his, you know, his race, his ethnicity and religion. But, you know, what scares these people, I think, the most, and when I say these people, I mean, the people that are, you know, vocalizing their fear, which I think don't necessarily speak for every portion of the real estate industry, as Tracy pointed out. I think what most scares them is that Mamdani's premise of city management does not revolve around them.

• 7:01Speaker 06

  And this was a major issue during the de Blasio administration that the press covered a lot, where de Blasio, despite appointing some real estate friendly commissioners and generally having a pretty good administration that was pretty good for real estate, he wasn't in the habit of kissing the ring and showing up to their galas and calling on them and stroking them in a way that, in contrast, Eric Adams, the current mayor, has been very good at doing. So I think a lot of this is meta feelings about their place in the city, their influence in City Hall, and depending on the policy, there could be varying degrees of tenuousness

• 7:46Speaker 06

  to actual policy and market implications.

• 7:49Tracy Alloway?

  So who is most scared? Give us some nuance on the vibes.

• 7:54Speaker 06

  Sure. So I think the most scared groups are rent stabilized landlords, because Mamdani has pledged to freeze rents on rent stabilized apartments, and then large developers, the biggest developers who not only have business models that largely depend on being in an informal cartel and having the best relationships with the people that make policy in the city and the most powerful players, but also have a greater sense of civic duty and their role in civic society. And I think Mamdani's rhetoric and some of his policies threaten their sense of their own place within the city.

• 8:38Joe Weisenthal?

  You know, it's interesting, Tracy, I'm thinking back, we did that not long after we interviewed Mamdani. We interviewed the Jersey City mayor, who didn't win his primary nomination for governor. So not everyone who comes on Odd Lots automatically wins. But one of the things he said that was really interesting is that by, he said, he talked about de-politicizing. And that essentially by making it more streamlined, the process to get approval.

• 9:05Joe Weisenthal?

  That there are these developers who maybe their edge was that they really knew how to play the game within these boards within, you know, the community. Suddenly, like, that is a marginal edge that disappears in a system that is much more straightforward. And Mamdani himself, if I'm not mistaken, Ben, has also talked about, he does want more development. He's talked about market rate development, and he's also talked about just sort of making that process, if the developer meets certain requirements, labor pay, et cetera, just much more straightforward, which, again, would seem to speak to your point that perhaps some of the most threatened entities would be those ones who are big and best positioned to sort of play the politics side of the game.

• 9:48Speaker 06

  Yeah, I think streamlining does not necessarily benefit the most entrenched incumbents. I think that they wouldn't necessarily fare badly under a Mamdani administration, but they, at least if one takes Mamdani's policy pronouncements at face value, would not be in the driver's seat. You know, the Albanian guy in the Bronx, who's building a small multifamily building, he's going to be in a lot more position to benefit from these streamlined policies than, you know, the type of people that are being quoted in the New York Times.

• 10:20Joe Weisenthal?

  By the way, Tracy, before I forget, you know, Ben talked about the similarities with de Blasio. It's funny, because I think there was a quote, we're recording this July 16th. I think I saw a quote yesterday from Kathy Wilde in the news, that was basically like, Mamdani is like Bill de Blasio, except we like him. Like, he's likable, essentially, but, you know.

• 10:37Tracy Alloway?

  That's pretty funny. I mean, yeah, I get it. Okay, so, part of this discussion, I understand why developers might be concerned about, like, losing their competitive advantage when it comes to navigating City Hall and all of that. Are there any concerns beyond initial approval for projects? Is there a concern, for instance, about an emphasis on public housing, perhaps crowding out private development?

• 11:07Speaker 06

  I think there's a generalized concern that the Mamdani administration and its vibes are going to depress private investment, whether that's in existing housing or building new private housing. However, even under that scenario, which I don't really agree with and think is kind of a cynical view, there would be beneficiaries of that scenario. So let's say that does happen. Rent stabilized rents are frozen and private investment in new development and new housing plummets.

• 11:37Joe Weisenthal?

  They're going to upcharge the market rate.

• 11:39Speaker 06

  Exactly. Market rate rents would increase considerably. So under that scenario, the market rate landlords would do very well and the rent stabilized landlords who are already not doing well would continue to not do well. And the affordable developers who only build housing with public subsidy, which Mamdani wants to spend considerably more on subsidized housing, would also benefit. So it really speaks to the many different stakeholders within the real estate industry who have different and sometimes conflicting interests.

• 12:16Speaker 00

  What's next for virtual assets? I'm Jacob Rees, host of Economy Scale, a series exploring growth in key global sectors. And in this episode, we're diving into the digital forces shaping finance. Sean McHugh from Dubai-based Virtual Assets Regulatory Authority has this to say.

• 12:32Speaker 07

  We're seeing a lot of institutional players come in, digital asset dedicated hedge funds, high-frequency traders and that sort of thing, and folks who service institutional clients.

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  As more capital enters the market, adaptive regulation is likely to become increasingly key. Reese Merrick of Ripple says.

• 12:48Speaker 08

  A lot of regulators globally would like to keep the industry at arm's length. That's the opposite here. I think also what you'll find is that regulation and frameworks can come out, but some of them are maybe a slight iteration on some 80-year-old policy and not actually in line with what the technology can do and offer. And again, that's very different in Dubai.

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• 13:59Speaker 01

  and hiring practices, but according to recruiters, advisors, and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company, and Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates, quote, "must be willing to work extended hours and weekends as needed." One major perk for all that hard work: employees' access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute brought to you by ChatGPT. Get started at ChatGPT.com.

• 14:41Joe Weisenthal?

  If demand for residents in New York City broadly is stable or continues to grow as it has been, in this scenario where in theory developers just want to pull back, the landlords who have exposure to the market rate, market rate units, you'd think they would do very well.

• 15:00Speaker 06

  Yeah, and in fact, I have clients who are market rate developers who are out in the market fundraising right now with this argument, to say that if we should, you should fund this project of ours right now because we're going to be the last buildings to be developed before Mom Donnie comes in and freezes everything, and therefore we're going to have the best product in the market and be able to charge the highest price.

• 15:19Joe Weisenthal?

  Great pricing power.

• 15:20Tracy Alloway?

  That's amazing. So the cost shift is already happening, basically?

• 15:24Speaker 06

  Yeah, but like, again, we're People are freaking out. I'm not sure that that is necessarily grounded in reality, but I think a lot of the rhetoric, both public and private, we've seen in light of Mamdani's primary victory, is PR and spin. In real estate, everyone's always trying to find an angle to say why their project is best, or why their project should be funded, or why I'm not making this decision, and why I look smart because of that. So we're still very much in the spin zone.

• 15:54Joe Weisenthal?

  Let's talk more about that, because I feel like one of those cliches, which probably has some truth, is that, yeah, people who freak out and let themselves get hysterical don't do as well as businesses. People who adapt to the new environment and sense the opportunities. So you've described one set of people who may be thinking opportunistically right now, which is the people who might have the opportunity to build something before rent freezes come into place. They're going to have the pricing power by this. What else are the opportunities that people sense about, yeah, okay, maybe we don't like the policies, but there is a money-making opportunity under the Mamdani administration? Who else is licking their chops, so to speak?

• 16:38Speaker 06

  One other group that's licking their chops is the developers that specialize in building affordable housing, which are both for-profit and nonprofit developers. And they have done pretty well, or they did very well under the Bosz administration. They had done well during the Adams administration. They consistently do well, because Mamdani wants to build more government-subjects housing than any previous mayor. But it's not like the developers and the labor for building that housing is just going to materialize out of the government. You're going to be using private sector players to do this. So these groups, or these players, are taking a different approach than some other pure-market-rate developers in the real estate industry, and trying to craft a separate piece with the

• 17:22Speaker 06

  Mamdani administration to say, hey, we want to help you meet your goals. We know you want to spend a lot of money. This is good for both of us. And I think another group, ironically, and they're not so much licking their chops, because I think they're very scared, is the rent-stabilized building owners. You know, as we've discussed on our, one of our previous podcasts, you know, this is a distressed sector and it's sort of been heading for a reckoning. And I think Mamdani's policies are going to lead to an acceleration of that trend. So that something gives here and I think it could give in a, in a sort of cynical way, you know, at the Supreme Court. Yeah.

• 18:04Speaker 06

  Or it could give in a, you know, more optimistic way by, by sort of Mamdani being something like Nixon to China and going to Albany and crafting some sort of new regime for these buildings that, you know, does not burden tenants, but also stabilizes them and make sure that they don't collapse, which is not really in the interests of anyone.

• 18:24Tracy Alloway?

  Yeah, this is good context because the long suffering rent stabilized building owners have been trying to loosen regulation for a long time. And I think they even sued on a constitutional basis. And clearly the goal is to try to get this to the Supreme Court. But in that context, you mentioned labor really quickly and I want to go back to that because one of the proposals that Mamdani has is using unionized labor to build all this affordable housing. And I'm curious how feasible that is, what the availability is and how that actually feeds into costs.

• 19:02Speaker 06

  Sure. So when talking about this issue, I think it's important to keep in mind that this is not a Mamdani issue. The construction unions, all were back in Cuomo. This is really a New York issue writ large. We'll see how Mamdani, you know, they, the, unlike most of the other powerful unions, the construction unions still have not abandoned Cuomo. They, they have not endorsed Mamdani yet. That said, there's obviously organized labor's job is to advocate for the most wages and best benefits for their members. They also need to make sure that their members keep working. So. Right now, we're in a situation with this tax program that was negotiated in two legislative

• 19:45Speaker 06

  sessions ago, where in for particularly large projects, the labor requirements are viewed as too onerous and no one is building buildings that qualify under this wage standard. So there needs to be some sort of peace that is brokered here. And I think this could be an opportunity, you know, with all the credibility that M'Nani has built on the left, to craft a peace between labor and developers to make it so that we can build housing with unionized labor, but it doesn't break the bank.

• 20:19Joe Weisenthal?

  It's interesting. You point out, there's something I've been thinking about, but you point out that, for example, most of the unions supported Cuomo, some of them, such as the construction union, which I hadn't realized, still backing Cuomo. Cuomo also won the endorsement, I think, although they've switched to the hotel workers' union, which I also want to talk about. But it's interesting to me because when people think about a left-wing mayor and how it can go wrong, they reach for the example of Brandon Johnson in Chicago. Brandon Johnson came out of the union machine. I mean, he was a part of the teachers' union in Chicago. M'Nani, for all his, I'm sure, ideological affinity for organized labor, he doesn't come out of that machine the same way Brandon Johnson, let alone, to

• 21:04Joe Weisenthal?

  some extent, Cuomo did. So it does feel like there is a potential for some sort of, you know, shifting of the plate, so to speak.

• 21:12Speaker 06

  Yeah, I mean, who knows what's going to happen. But I think the, it's hard to argue that our, that coalition politics and politics generally in New York City have not been scrambled by this event. And I think it remains to be seen how, how well that shakes out, and whether these groups that, you know, have been operating in relative concert.

• 21:35Speaker 06

  You know, perhaps at the expense of of other constituencies remain allied, or whether new alliances are formed to solve some of the city's problems.

• 21:43Tracy Alloway?

  How much of this just boils down to people, wealthier people, not liking higher taxes? Because I imagine, you know, if they're trying to get a message out there saying that they don't like taxes, probably doesn't resonate with a lot of New Yorkers. But saying that because of higher taxes or because of all these other policies, there's going to be less development of property, less affordable housing. Is that just them trying to spin it that way?

• 22:10Speaker 06

  I personally, I think so. And, you know, our media environment is structured as such that there's not really much downside in doing that. So, you know, you hear about, I remember a couple of years ago, there was a lot of stories about David Tepper, the for Appaloosa Capital Management, moving to Florida to duck a income tax increase in New Jersey. We know there's a media frenzy about this, but no one covered that he moved back.

• 22:33Joe Weisenthal?

  I'm always saying this, no one's going to stay in Florida. Give me a break.

• 22:37Speaker 06

  And I, you know, I think, you know, the, the data or an analysis that has been done is this shows that like millionaire tax flight actually is largely a myth and occurs at a much lower rate than it does for, for middle and lower income people. And, you know, there's all sorts of groups that sort of take advantage of this dynamic. So for instance, a luxury real estate broker will be, you know, pub, go into the press and say, you know, I'm getting, my phone is ringing off the hook on people that want to sell their apartments here or move to Palm Beach. You know, does that get them the attention of more people who might be thinking that way? Yeah, but does it reflect market reality? Or, or is anyone, you know, testing to see if that they've been proven wrong? No, and I think, you know, we're, this isn't just a New York City phenomenon.

• 23:21Speaker 06

  We're seeing a lot of dissonance between people sort of ideological and policy priors and actual economic analysis. And I think a really good example is a mayor who Raised taxes, including on upper earners, several times in New York City. Friend of the pod, Michael Bloomberg. And a lot of these same people who are complaining about Zohran think that Bloomberg was their model mayor and really want to go back to the Bloomberg economy. So people are sort of flailing about looking for any possible way to spin their own preferences.

• 23:58Joe Weisenthal?

  Friend of the pod is a... How are you gonna...

• 24:01Tracy Alloway?

  Well, I was gonna do the standard disclaimer. It has become standard, but Michael Bloomberg is, of course, the owner of Bloomberg LP, which runs Bloomberg Media and Bloomberg News. So there we go. That's the disclaimer.

• 24:13Joe Weisenthal?

  I like describing him as friend of the pod.

• 24:17Joe Weisenthal?

  But this is a really important point. Like, you're always gonna go to Florida. If you go to Florida, you can't be an in-studio guest on the Odd Lots podcast and do all the wonderful things that being in New York City affords you. It really is... I mean, I don't know, actually, the stats on who leaves New York City, but it's not the rich. I mean, it's like people who just find the city unaffordable, right?

• 24:36Speaker 06

  Right. And I would encourage everyone to Google Cristobal Young, who's a professor at Cornell who's done a lot of work on this very issue. And something Kathy Wilde mentioned in your interview and something you hear across business leaders generally and particularly in commercial real estate, rather than multifamily, is the importance of our workforce. And if people who... The talent that fuels New York City cannot afford to live here, that is bad for New York City's economy. And would lowering the cost of housing be bad for some landlords? Yes. But would it be good for a lot of other sectors of the city, including the office

• 25:21Speaker 06

  real estate sector? Yes. Similarly, with childcare. Would... I don't know, anyone who's really opposed to childcare. Like, I think that's a problem for everyone, and it would help employees and employers, but also help real estate owners. Because if you remember during the Boz administration, they rolled out universal pre-K. It's not like there's all this empty space in public buildings near people's houses that you're gonna put childcare facilities. These are gonna be rented in private buildings and result in a huge amount of leasing velocity that will often occur in space that is otherwise hard to lease.

• 26:04Speaker 01

  This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume, so writes Bloomberg Businessweek's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs and hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting

• 26:46Speaker 01

  and hiring practices, but according to recruiters, advisors, and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company, and Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates "must be willing to work extended hours and weekends as needed." One major perk for all that hard work? Employees' access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute brought to you by ChatGPT. Get started at ChatGPT.com.

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• 28:27Tracy Alloway?

  When we spoke to Kathy, she did bring up crime. And, you know, initially, maybe you don't make a direct connection between economic policy and crime, but the argument is if there's lots of crime going on in the city, people are going to want to move away to that New York City flight exodus point. How are landlords or the real estate industry thinking about that particular aspect? Is it important to them? Because that would be maybe a reason to go for someone like an Eric Adams.

• 28:57Speaker 06

  Right. I think it's very important to the real estate industry. And, you know, a lot of people are scarred by the experience of the 1970s and 80s in New York, even if the contributing factors for New York's issues back then are myriad and complicated. You know, everyone agrees that, you know, having a crime ridden city is not in the interests of building owners and property values and really the city at large, given how much of our budget is based on property taxes. And, you know, Mamdani has said that he's, you know, considering keeping on Jessica Tish, the current police commissioner, that and that he's not going to reduce NYPD head count. I think the real estate industry is very skeptical of this, but, you know, the cooler

• 29:40Speaker 06

  heads within it are sort of keeping in mind that New York City is ultimately a creature of the state. And we have a very moderate governor. We have a more moderate than Mamdani legislature and the legacy of the New York State Constitution, but also the fiscal crisis in the 1970s provides Albany with a lot of ways to make sure that the city does not go off the deep end on issues like this.

• 30:10Joe Weisenthal?

  Can we talk about the last four years? I mean, it's a weird four years because, you know, you're starting the baseline in 2021, sort of during the worst of the post pandemic chaos. There's been a decent amount of building, I think. However, it's a really expensive city. There's a reason the affordability line was, I think, so effective in this recent mayoral primary. Like, well, you know, do you have a scorecard for how Mayor Adams did on housing?

• 30:42Speaker 06

  Hmm. I'd give him a...

• 30:50Speaker 06

  C?

• 30:51Joe Weisenthal?

  Okay.

• 30:51Speaker 06

  I think, C+ maybe, B-.

• 30:53Joe Weisenthal?

  All right, say more.

• 30:54Speaker 06

  I think the land use policy-

• 30:56Joe Weisenthal?

  My children go to a prog- One of my children goes to a very progressive school. They don't have grades. They just have this kind of stuff. So you can, you could give the, the sort of like a qualitative assessment. Feedback.

• 31:06Speaker 06

  Yeah. I, I think the, the land use policy was generally pretty good. You know, the city of Yes, which, which you may have heard of, which is, you know, the biggest change to the zoning code in probably 70 years. The income support policy, which, you know, a lot of our, our housing woes are, you know, obviously rents are, are too damn high and prices are too damn high. But also wages are too damn low. And, you know, we need to make sure that people can afford to pay rents. We need to make sure that people can afford to pay the rent that it costs to finance a new, new building. And the administration has fought sort of the expansion of voucher funding.

• 31:46Speaker 06

  Where I think it's fallen short on housing is dealing with sort of structural issues with our housing market, particularly the property tax system. And they are not the first administration to fall short on this issue. But I think it speaks to how much Adams's non-housing policies and the sort of extracurricular activities have impacted his ability to address structural issues like property taxes.

• 32:14Joe Weisenthal?

  Can you just explain? Yeah.

• 32:15Speaker 06

  So New York City's property taxes, property tax system has two sort of major distributional issues. One is that a neighborhood like Park Slope is way under taxed relative to a poorer neighborhood like Canarsie. So the same, two properties paying the same amount of property taxes in those neighborhoods, the property in Crown Heights will be worth five times more and is paying the same amount of property taxes as the property in Canarsie. The other distributional issue is multifamily versus single family or one to three family. And multifamily and commercial are taxed way more than their relative value contribution to the city's total property tax roll. And this is a longstanding issue.

• 33:00Speaker 06

  There's been, you know, report after report and commission saying, you know, here's what we should do. And no one has sort of figured out how to go to Albany to craft a new regime that, you know, addresses these issues, which, you know, in addition to producing a lot of discriminatory impacts, are really hampering our housing production and on existing housing operating costs. And I think this is a particularly ripe time when to address this issue because of the crisis with a certain segment of the rent stabilized buildings, because these buildings are way overtaxed. So one could see, you know, in a best case scenario, the Mamdani administration is, you

• 33:44Speaker 06

  know, it's instituted its rent, rent freeze, you know, buildings are starting to have trouble. The Mamdani administration doesn't want to see these buildings, you know, they don't want collapsing buildings. That's not good for tenants. It's not good for their, their political optics. It's not good for city, the city's, you know, image. So Albany says, all right, we're going to craft, you know, create a new class for these rent stabilized buildings and it's going to lower their taxes. And that's going to alleviate, you know, the burden on these owners from keeping their rents very low.

• 34:12Tracy Alloway?

  How much of this sort of existential concern being expressed by the real estate industry goes away if interest rates come down significantly?

• 34:22Speaker 06

  I think a lot of it, but it's still, it would still be very much there. I think it would become acute, become less acute, but would persist because a lot of this is about, these are longstanding conflicts between the real estate industry and, you know, between landlords and tenants, between, you know, what political faction runs New York. And those cleavages would, would remain even if interest rates are lower. I think interest rates would. Bail some people out and increase transaction volume and delay the time at which someone that's in trouble might go bankrupt, but structural issues would remain.

• 34:59Joe Weisenthal?

  Can you real quickly just explain the roots of the tax disparity or why, say, a unit in Brooklyn Heights is relatively undertaxed? Mamdani got into a little bit of trouble because I think somewhere on his website at one point, it said something about historically white neighborhoods and people like, oh, he wants to tax white people more. It happens to be true, however, that a lot of the neighborhoods that benefit from this structure do happen to be more white. But what is the origin of why certain neighborhoods are undertaxed, given their sort of like, you know, their economic base?

• 35:33Speaker 06

  Sure. So I this, the current property tax regime was crafted in the early 1980s as a result of a court case. And it instituted caps on the amount that assessments can increase.

• 35:47Joe Weisenthal?

  Okay.

• 35:47Speaker 06

  And

• 35:49Joe Weisenthal?

  These places have seen their assessment surge.

• 35:50Speaker 06

  As a result, yeah. So like Canarsie in 1982 was maybe a comparable income, you know, middle income, lower middle income area that is it is now, whereas Park Slope was a much less well off area than it is now. And if the property values in places like Park Slope and Williamsburg and to some degree, a place like Brooklyn Heights have skyrocketed, but the the tax burden on those properties have not gone up commensurately.

• 36:17Tracy Alloway?

  With your real estate hat on, who's going to win?

• 36:20Speaker 06

  Mamdani. I think it's, I think these, these efforts to draft another candidate or, or, you know, reboot the Cuomo campaign are totally doomed. And the real estate industry, I think, is, is really, internally is very split over what to do. And, you know, some are going to back Mayor Adams, some are going to back Cuomo, some are trying to craft a piece with Mamdani, and some of them are just going to stay out.

• 36:45Joe Weisenthal?

  Ben Typer, thank you so much for coming back on Odd Lots. Always love getting your, your level headed perspective on what's happening in our city.

• 36:54Tracy Alloway?

  Thank you so much, Ben.

• 36:55Speaker 06

  My pleasure.

• 37:10Joe Weisenthal?

  I always really liked talking to Ben. I had not realized the sort of, I mean, there was a lot there that was interesting. That sort of, that source of the disparity in property taxes. It makes a lot of sense that if you just can't raise property taxes at a certain clip, how, you know, relatively undertaxed, any sort of booming neighborhood such as Williamsburg will inevitably end up being.

• 37:34Tracy Alloway?

  Yeah, that seems like a problem, given that like, a big chunk of the recent story of New York City is gentrification and all these neighborhoods where like, a warehouse that used to cost, I don't know, a hundred thousand in the eighties now costs like 10 million or whatever. The other thing I thought was really interesting, it sort of hammered home that point that we discussed previously, but the idea of the competitive advantage for large landlords basically being they can network in City Hall, they can presumably do the paperwork and all of that stuff. And so if an administration comes in that jeopardizes that particular advantage, then they're not going to like it.

• 38:14Joe Weisenthal?

  Right. Like, maybe the rules for development will be more stringent, but if they're just sort of uniform where it's like, okay, and I don't know how it could ever be in real estate, but let's just say, you know, in the sort of abstract sense, you check these four boxes and you are approved to build a new development, then intuitively, yeah, that would sort of undermine the relative advantage enjoyed by a big, powerful entity that sort of knows the system, so to speak.

• 38:43Tracy Alloway?

  On the other hand, of course, maybe there are smaller property developers who really like the idea of a streamlined process, doing away with things like the parking requirement and stuff like that, dual staircases versus single, I don't know.

• 38:56Joe Weisenthal?

  And I do think like you can't, you know, if you're anxious about what the Mamdani administration is going to bring, you can't really simultaneously argue that it's going to stifle development and rents, right? If development gets stifled, then the market rents go up.

• 39:16Tracy Alloway?

  Yeah.

• 39:17Joe Weisenthal?

  And if, you know, and so there will be this balancing effect. You know, obviously there are the landlords who are deeply exposed to the rent stabilized market. We've talked about them before, but they're hurting right now as it is. I also do think at some point, maybe we should talk about the prospect of a Supreme Court case in the next couple of years that eliminates rent stabilization or rent regulation period. Possibly, you know, you mentioned the sort of cynical possibility of Mamdani being an accelerant that gets that case in front of the Supreme Court at some point could have big implications.

• 39:48Tracy Alloway?

  This entire conversation has reminded me that I need to call my super and get something fixed in my apartment. So this was useful.

• 39:54Joe Weisenthal?

  This is what I miss about being a renter is I don't have someone that I can call as easily.

• 39:59Tracy Alloway?

  It's all up to you.

• 40:00Joe Weisenthal?

  There are some advantages to being a renter, you know?

• 40:02Tracy Alloway?

  All right. Shall we leave it there?

• 40:04Joe Weisenthal?

  Let's leave it there.

• 40:05Tracy Alloway?

  This has been another episode of the Odd Lots Podcast. I'm Tracy Alloway. You can follow me at Tracy Alloway.

• 40:10Joe Weisenthal?

  Actually, I do have a super. I just have to pay him now for it where it used to be all these various repairs and stuff. The burden fell on my landlord before. Now the burden.

• 40:20Tracy Alloway?

  That's not too bad because like the, the big problem with supers I feel is just availability or the big problem with getting something fixed is finding someone and getting them in.

• 40:29Joe Weisenthal?

  Anyway, every time something breaks, I have to pay for it now. They don't tell you that when you become a owner.

• 40:34Tracy Alloway?

  Pretty sure they do.

• 40:36Joe Weisenthal?

  And I'm Joe Weisenthal. You can follow me at the Stalwart. Follow our guest Ben Carlos Typer. He's at SoBendito. Follow our producers Carmen Rodriguez at Carmen Arman, Dashal Bennett at Dashbot and Kel Brooks at Kel Brooks. For more Odd Lots content, go to Bloomberg.com/oddlots where we have the daily newsletter and all of our episodes and you can chat about these topics 24/7 in our Discord, discord.gg/oddlots.

• 41:00Tracy Alloway?

  And if you enjoy Odd Lots, if you like it when we talk about New York City housing policy, then please leave us a positive review on your favorite podcast platform. And remember, if you are a Bloomberg subscriber, you can listen to all of our episodes absolutely ad free. All you need to do is find the Bloomberg Channel on Apple Podcasts and follow the instructions there. Thanks for listening.

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