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After Hochul's Narrow Win, CRE Hopes Focus Shifts To Tax Breaks

New York Gov. Kathy Hochul won her first election campaign, beating Republican Rep. Lee Zeldin, who officially conceded Wednesday.

The election was the state's tightest contest for governor in decades: Hochul collected just over 5% more votes than Zeldin, who swept up votes in most of the state’s counties outside of New York City.

Hochul positioned herself as a friend to NYC’s real estate community during months of campaigning, significantly outraising Zeldin from the industry, although more real estate cash started to flow toward Zeldin in the weeks before Election Day.

New York Gov. Kathy Hochul speaks in Far Rockaway ahead of the 10th anniversary of Superstorm Sandy, Oct. 28, 2022.

But the most important thing for CRE is that the race is over, industry figures told Bisnow.

“As far as real estate is concerned, I think it would have been fine if either one of the two had won, because I suspect strongly that the 421-a tax abatement program is going to come back in some form, which is really necessary to drive housing creation,” said B6 Real Estate Advisors founder and CEO Paul Massey, a one-time Republican candidate for New York City mayor.

The abatement, which expired earlier this year after Hochul's proposed reform didn't make it out of the state legislature, gives developers a tax break in exchange for building mixed-income rental apartments.

Since the program's expiration, financing of rental housing construction has slowed, so reviving the conversation around a replacement is fundamental to Hochul's success, Ariel Property Advisors founding partner Victor Sozio said.

“To me, most importantly, she was viewed as the candidate that was more likely to prioritize the development of affordable housing across the state,” he said.

But Hochul and the rest of New York’s politicians will need to move fast to signal to developers that they are taking the housing crisis seriously, said Red Apple Group CEO John Catsimatidis, a prominent Republican donor and commentator. 

“A lot of real estate people are waiting for some tax incentives to give them the reason to take money out of their pocket and invest in New York City,” he said.

Hochul will be presiding over a smaller majority in the state legislature after Republicans flipped several state Senate seats in Long Island and the city's northern suburbs, as well as two Assembly seats in south Brooklyn.

New Yorkers also voted to approve four ballot measures, including the Environmental Bond Act — a measure that allows the state to sell $4.2B in bonds to fund climate change and flood mitigation projects, upgrade water quality infrastructure, and land conservation. 

Much of the Republican campaign strategy focused on crime and inflation, with the former holding particular resonance with the city's real estate industry.

“I think safety and the perceived feeling of safety amongst New Yorkers is a big issue,” Sozio said. “And I think the tightness of this race goes to show it's indicative of how a lot of New Yorkers feel.”

Florida has become a significant rival for the business of developers who have historically worked in NYC, Catsimatidis said, because there is less regulation, lower taxes and less violent crime potentially harming property values.

“Florida is the new safety zone,” said Catsimatidis, who is building a $400M condominium tower in St. Petersburg. “I have a choice of building three more buildings in Coney Island and spending a billion dollars there, or spending the next billion in Florida.”

But others in the industry, like Compass Vice Chairman Robin Abrams, said the results show personal values were just as important to voters as economic ones when casting their ballots for the state's highest office.

“While we all have concern for how the election and those elected will affect our pocket books, this election in particular has people looking beyond that to big issues that have big consequences for us and future generations,” she told Bisnow in an email. "Voters showed they are focused on the issues and not on the personalities. Climate change, crime, and abortion rights are on their minds in addition to inflation and the economy."

Regardless of their political leanings, however, CRE industry figures who spoke to Bisnow Wednesday agreed on one thing: They saw the collaboration between Hochul and Mayor Eric Adams prior to the election and are excited for what a continued partnership between the pair could mean for their industry.

“From a political environment, you do need clarity on the go-forward leadership. We have a relatively new mayor, a relatively new city council, and now a new, confirmed governor,” BOS Development Managing Partner Beatrice Sibblies said. “I'm excited for what can be done when there is a spirit of collegiality between the city and state. It’s time to get to work.”