By Anita Hamilton
The new mayor of New York City is getting serious about raising taxes on the wealthiest residents of the nation's city, and it's putting pressure on stocks of real estate investment trusts, especially those focused on the New York market.
While any plan to do so would need state approval, Mayor Zohran Mamdani made it clear in a Wednesday press conference that he's not going to drop the idea.
Brushing off worries of millionaires (and billionaires) decamping the city as " fear mongering," Mamdani doubled down Wednesday on his campaign promise to raise taxes by 2% on New Yorkers who make more than $1 million a year to help balance the city's budget and fund initiatives such as universal child care.
"The time has come to tax the richest New Yorkers and the most profitable corporations," he said.
"New York City is facing a serious fiscal crisis," he added, citing a $12 billion fiscal deficit that he says the city inherited from former Mayor Eric Adams that was exacerbated by insufficient funding from New York state. In addition to targeted higher taxes, his solution involves securing a larger share of state tax revenue and increasing efficiencies within the city government.
Shortly after he spoke, stocks of real estate investment trusts focused on the New York office market -- SL Green Realty Corp., $Vornado Realty Trust(VNO-N)$, and Empire State Realty Trust -- started falling, and they closed the day down between 2% and 3%. Meanwhile the broader REIT market as tracked by the Vanguard Real Estate ETF, closed down around 1%.
Fresh off the strongest year since 2019 in terms of commercial leasing activity, "there's this concern of this or anything that could derail the New York office story," BMO Capital Markets real estate analyst John Kim told Barron's.
While Mamdani hasn't specifically proposed any changes to office rents, investors worry that big companies would be less interested in renting space in New York City if some of its wealthiest residents left the five boroughs as a result of tax increases.
Mamdani's comments weren't the only thing putting a chill in the commercial real estate market. The Federal Reserve's decision to hold interest rates steady, while expected, also put downward pressure on the group. "REITs generally, they're very interest-rate sensitive," Kim added.
Notably, New York office REITs fell much less than they did last summer when Mamdani first floated his wealth tax plan in June. Back then SL Green, Vornado, and Empire State fell around 6% overall. That may be because Gov. Kathy Hochul hasn't backed Mamdani's plan to raise taxes on the wealthy -- at least not yet.
"So far Gov. Hochul is standing her ground," Piper Sandler analyst Alexander Goldfarb said. "I think the view from the progressives is that she's relented on other things, she could relent on this."
Goldfarb also said that Wednesday's dip may be an extension of the pandemic-era lag in REITs. "People have been taking money out of REITs to fund other stuff," he said. He added that office REITs are more levered, meaning they take on more debt than other sectors, which can make their prices more volatile.
Write to Anita Hamilton at anita.hamilton@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
January 28, 2026 18:45 ET (23:45 GMT)
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