As Zohran Mamdani’s initiatives, such government-owned grocery stores and rent-price controls, alarmed investors, shares of businesses with ties to the New York City real estate market fell on Wednesday.
Mamdani defeated Andrew Cuomo, the former governor of New York state, his closest rival, to win the Democratic primary Tuesday night. In the main election in November, he might still run against Cuomo and incumbent Mayor Eric Adams.
Given the city’s ranked-choice voting system, it may still be some time before the primary’s true victor is declared, as Mamdani received less than 50% of the vote. Nevertheless, shares of SL Green Realty Corp. (SLG), another real estate investment trust, sank 5.7% on Wednesday, while Vornado Realty Trust’s stock (VNO) slumped 6.7%.
The stock of Flagstar Financial Inc. (FLG), a major lender in the real estate market in New York City, fell 3.9%.
MarketWatch has contacted Flagstar, SL Green, and Vornado Realty Trust for comment, but has not heard back.
Vikram Malhotra, an analyst at Mizuho, cautioned about the detrimental “Zohran effect” on office equities in New York City, including those of Vornado and SL Green.
“More selective corporate spending/hiring in the city and more out-migration of individuals and families, reducing the need or growth of office leasing,” Malhotra said in a note to clients, citing growing concerns over Mamdani’s “more socialist-oriented” agenda.
SL Green owns 25.3 million square feet of property, of which 96.6% is located in the Manhattan borough of New York City. This includes around 1.4% of residential property and 95.1% of commercial property.
Of Vornado’s total square footage, 24.36 million square feet, or 75.1%, were in service in New York.
Malhotra reaffirmed his prediction that Vornado’s stock will outperform, stating that he would see any weakness brought on by Mamdani’s win as a chance for investors to purchase. Regarding SL Green’s stock, he maintained his neutral rating.
Peter Winter, an analyst at D.A. Davidson, reaffirmed his buy recommendation for Flagstar, stating that the stock has lost roughly 12% of its value over the last two weeks while Mamdani has improved in the polls.
“If he does win, this is a negative for FLG,” wrote Winter. Overall, the current price impact on the stock “seems overdone,” according to Winter, though Flagstar may eventually need to increase its reserves.
Ben Gerlinger, a Citi analyst, stated that concerns over Mamdani’s “sweeping ‘freeze the rent’ campaign” are “likely to see incremental downside pressure” on Flagstar’s stock.
The policy stance of the candidate “potentially pulls forward incremental credit concerns,” according to Gerlinger.
With regard to Flagstar’s shares, the longer-term fundamental impact “is likely very minimal.”
His buy recommendation for Flagstar’s stock was reaffirmed, stating that he still anticipates “material upside potential over a 12-month timeframe” and that the outcomes “could open the door to an even more attractive entry point in the very near future.”
In 2025, including Wednesday’s actions, Vornado’s stock has fallen 14.6%, SL Green’s shares have decreased 13.9%, and Flagstar’s shares have increased 14.6%. This year, the S&P 500 index SPX has added 3.6% to the 1.4% gain of the Real Estate Select Sector SPDR ETF XLRE.
