Hochul Defeats Zeldin. Here’s What It Means for Real Estate
Kathy Hochul (right) and Lee Zeldin (Getty)

Kathy Hochul (right) and Lee Zeldin (Getty)

Gov. Kathy Hochul vowed in June that she would go to bat for the real estate industry — now she’ll have a chance to prove it.

Hochul fended off a challenge from Republican Rep. Lee Zeldin, winning her first full term as governor, according to the Associated Press. She is the first woman to be elected to the position in New York.

Industry players largely favored Hochul, who appeared poised for an easy victory until the final weeks of the campaign, when her lead in opinion polls narrowed to single digits.

After taking over for Gov. Andrew Cuomo, Hochul pitched a proposal to replace the expired property tax break 421a, a key issue for real estate. But that and a slew of other proposals intended to spur housing development failed to move forward. Hochul has said that she plans to revisit the tax break and her other housing initiatives next year.

Hochul enjoyed support from some of the city’s top developers as well as the unions that represent building service workers and the construction trades. Early supporters of her campaign included Vornado Realty Trust’s Steve Roth, Extell Development’s Gary Barnett, Tishman Speyer’s Jerry Speyer, Silverstein Properties’ Larry Silverstein and Related Companies chair Stephen Ross and CEO Jeff Blau.

Developer Don Peebles, who hosted a fundraiser for Hochul in August, previously told The Real Deal that he was keen to see her “elected in her own right,” noting that he supports candidates who are “very qualified and that are going to break barriers.”

In the past two weeks, a political action committee tied to Madison Square Garden chair James Dolan spent $560,000 on ads promoting Hochul, according to the Times Union. Hochul’s plans for the renovation and expansion of Penn Station, as well as the 18 million square feet of surrounding new development, do not require the arena’s relocation.

Madison Square Garden’s operating permit expires next year and will need to be renewed by the City Council. Advocates have pushed against renewing the permit and for relocating the arena to create a new entrance and more light and space for the transit hub.

Meanwhile, Zeldin’s tough-on-crime stance resonated with some in the industry. Rising crime — or the perception of it — threatens to scare away businesses, tenants and tourists.

In October, Aurora Capital President Jared Epstein, alongside other notable names in the industry including Haim Chera, hosted a fundraiser for Zeldin. Epstein said he is not guided by political party affiliations, citing his support of Mayor Eric Adams, a moderate Democrat. He said Zeldin’s stance on criminal justice — vowing to oust Manhattan District Attorney Alvin Bragg and to change the state’s cashless bail policies — was the “common sense” approach to curbing crime in the city.

“Bail reform and the anti-police movement has really materially impacted the life my family and I have here in Manhattan,” he said, noting that his wife is afraid to go out alone at night and that he does not feel comfortable letting his kids out unsupervised. “With Kathy Hochul, the city is going to continue to deteriorate.”

Crime in the city has been on the decline for decades and violent crime remains at historic lows. But major felony offenses have been increasing over the past two years, exceeding pre-pandemic levels, according to City and State. Major felonies in the city’s transit system spiked 44 percent between January and September compared to the same period last year, according to a Bloomberg analysis.

Political action committees tied to the Rent Stabilization Association, a landlord group, poured nearly $90,000 into Zeldin’s campaign. Small landlords opposed to the 2019 rent law and eviction protections in the state’s rent-aid program rallied for Zeldin. And real estate dynasties including the Adjmi, Chera and Cayre families together gave hundreds of thousands of dollars to the Long Island representative over the last two years.

But Hochul remained the industry’s top pick. Developers argue the construction of multifamily housing, especially affordable apartments, is financially unfeasible without 421a or a similar incentive. Hochul’s attempt to replace the tax break in the state budget this year failed, with lawmakers showing little interest in negotiating the terms of the proposal, dubbed 485w. Zeldin voiced support for the tax break, but in its initial iteration, which has a weaker affordability mandate than Hochul proposed.

Progressives came to Hochul’s aid as her lead over Zeldin slipped, with the Working Families Party calling an “emergency all-hands-on-deck meeting” last week, according to the New York Times. In a statement Tuesday night, Housing Justice for All coordinator Cea Weaver said the uncertainty of Hochul’s victory is a “damning statement on the politics of moderation.”

“Hochul’s willingness to do the bidding of wealthy real estate donors and turn a blind eye to the suffering of everyday New Yorkers nearly cost her this election,” she said, referring to a lack of enthusiasm among left-leaning voters. The predominant narrative of the campaign, though, was that Zeldin gained ground because his focus on crime resonated with moderates.

Hochul has not publicly supported a key legislative priority of Housing Justice for All, good cause eviction. The governor has said that she plans to unveil a plan next year that could create up to 1 million homes, but it is not clear how that would be accomplished.

She is expected, however, to revive proposals to ease office-to-residential conversions and to allow the construction of accessory dwelling units in areas zoned for single-family homes. She may also pitch a measure that would lift the cap on residential floor-area-ratio in the city, which she previously proposed.

The success of these and other proposals hinges on the fate of the state Senate, and whether its Democrats shift to the left or right in response to Republicans’ gaining seats.