New York real estate interests couldn’t get mayoral primary voters to view Chicago’s 2023 election of Brandon Johnson as a cautionary tale. Zohran Mamdani cruised to victory for the Democratic nomination Tuesday with a campaign many saw as similar to that of the now-mayor of the Windy City.
Big Apple industry leaders and trade groups may want to take lessons from their counterparts in Chicago, who have found more success in containing a progressive mayor than they did trying to defeat him at the ballot box. The playbook employed in Chicago to check and balance Johnson may have something to offer.
No, Chicago real estate hasn’t had many political victories to celebrate since Johnson took office in 2023. There remain serious concerns about massive gaps in government budgets, surging property tax bills and zones of the city that have choked off multifamily deals using a new city law that frightens lenders. Little wonder the investment arm of the world’s largest bank in JP Morgan Asset Management is pulling out of major Chicago properties at losses.
Still, the industry could be in much worse shape politically in Chicago. Business leaders and lobbyists have worked hard to limit the damage. They swiftly drummed up a blowback to progressive politics that could have made matters worse from the industry’s point of view.
Real estate groups specifically convinced voters to turn down Johnson’s signature campaign promise — a big transfer tax hike on all property sales of $1.5 million or more meant to raise $100 million annually to combat homelessness — in a citywide election last year. Later, the Chicago City Council banded together to beat down a $300 million property tax hike Johnson initially proposed to help close a huge city budget shortfall.
The industry can try similar methods to blunt Mamdani’s pledges to freeze rents and raise taxes that he made cornerstones of his campaign.
Johnson took some shots from his own political allies for his management of the budgeting process, and his recent approval rating poll numbers have been terrible, making him a prospective one-term mayor — as the real estate industry likely wants.
But Johnson has placed a renewed focus on streamlining the building permit process, which developers have embraced even though it’s been slow to make a difference. And the results of replacing tax increment financing districts with his new $1.25 billion bond program to build affordable housing have yet to be meaningfully assessed.
Granted, Johnson’s election has still damaged Chicago’s reputation among real estate investors, although its multifamily market is gaining interest. Still, the Midwest’s nation-leading pace in rent growth is due mostly to a dropoff in new development taking place alongside sudden slowdowns in the Sun Belt.
All of this is to say that real estate hasn’t lost the political war in New York, even if the likelihood of Mamdani winning the general election would be viewed as a major setback and a barrier to progress. The industry needs to do its best to check Mamdani, if he’s ultimately elected, by muscling up its influence with the state and other local bodies needed to implement his campaign promises that could cause serious harm to real estate.
Industry leaders in both Chicago and New York will have their work cut out for them as they fight against a progressive movement gaining more momentum on policies they view as anathema to a well-functioning real estate market, some borne out of reaction to Donald Trump’s return to the White House.
In many ways, the cities are on separate timelines. It could be argued that Johnson’s election served as a test of how far the progressive movement could go, as it came during Joe Biden’s presidency and just after Karen Bass’ election as mayor of Los Angeles. Mamdani’s Tuesday victory, meanwhile, could be viewed as symptomatic of the backlash against Trump’s dizzying approach to tariffs, ham-handed moves on deportations and bravado on the international stage.
In essence, real estate needs to find a way to convince voters in major cities that business-oriented candidates aren’t the enemies of Johnson and Mamdani supporters. Trade groups should rather emphasize that their candidates will pursue similar goals as progressive politicians, but using methods sustainable for the industry rather than costly to one group while beneficial to another.
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