NEW YORK - New York City's real estate sector could face significant challenges under Mayor-elect Zohran Mamdani, according to Barry Sternlicht, billionaire founder and CEO of Starwood Capital Group. Sternlicht, whose firm holds extensive commercial and residential properties in the city, said high union costs and proposed housing policies could drive development expenses even higher and slow the addition of new housing.
"Every major project in New York requires union labor, and that makes construction extremely costly. It contributes to some of the highest housing prices in the country," Sternlicht told CNBC. He added that efforts to negotiate with unions often fail, making it difficult to add new housing supply efficiently.
Sternlicht also criticized Mamdani's plan to freeze rents in rent-stabilized apartments. "The real priority should be creating more housing. That won't happen easily without subsidies and more flexibility from unions," he said.
Public safety was another concern. "If residents feel their children aren't safe, families will leave, and schools will empty. Any move to defund or undermine the police could make matters worse," Sternlicht warned.
He indicated Starwood Capital is already evaluating whether to move its Manhattan office due to what he described as a climate of hostility toward success in the city, which helped Mamdani win. "History shows socialism has never worked effectively anywhere," he said, adding that encouraging opportunity and supporting economic growth would be a better approach than taxing success or relying on federal aid.
Mamdani has not issued a public response to Sternlicht's comments.