\By: Carl Schwartzbaum

As New York City prepares for the inauguration of its first openly socialist mayor, Zohran Mamdani, a growing chorus of business leaders is warning of an impending crisis in the city’s real estate and investment sectors. Chief among them is Barry Sternlicht, billionaire founder and CEO of Starwood Capital Group, who told VIN News and other outlets this week that the incoming administration’s policies could drive development costs to record highs, halt construction projects, and accelerate the flight of capital from the five boroughs.

In a candid interview with CNBC cited by VIN News in a report on Sunday, Sternlicht described a worsening environment for builders, investors, and property owners, citing union labor mandates, rent freezes, and an increasingly hostile tone toward private enterprise under Mamdani’s leadership. “Every major project in New York requires union labor, and that makes construction extremely costly,” he said. “It contributes to some of the highest housing prices in the country.”

The billionaire developer — whose Starwood Capital Group oversees a vast portfolio of commercial, residential, and hotel assets across New York — said the current system has made it “nearly impossible” to deliver affordable housing at scale. Attempts to negotiate with trade unions, he added, “often fail or drag on for years,” inflating costs and disincentivizing development even as the city faces one of its worst housing shortages in decades.

According to the information provided in the VIN News report, Sternlicht’s comments highlight a growing unease among major property developers and institutional investors who view Mamdani’s proposals as ideologically driven rather than economically viable.

New York’s construction industry has long been dominated by powerful labor unions — a political base Mamdani relied on heavily during his campaign. While union advocates argue that strong collective bargaining ensures fair wages and workplace safety, Sternlicht warned that the economic impact of unchecked labor costs has become unsustainable.

“Union labor in New York is often 30 to 40 percent more expensive than non-union labor in comparable metropolitan markets,” Sternlicht told CNBC, as reported by VIN News. “That directly translates into higher housing prices, fewer new units, and the continued displacement of middle-class families who can’t afford to live in the city they work in.”

Sternlicht’s critique aligns with concerns voiced by other developers, including those behind major projects like Hudson Yards and Essex Crossing, who have similarly lamented how high wages, rigid work rules, and bureaucratic permitting procedures combine to delay construction and inflate costs.

The VIN News report noted that under Mamdani’s administration, those pressures could intensify. The mayor-elect’s economic platform emphasizes “stronger union partnerships,” increased labor protections, and “democratizing housing,” with proposals to freeze rents in all rent-stabilized apartments — a policy Sternlicht called “catastrophic” for both landlords and the housing supply.

The proposed rent freeze, a cornerstone of Mamdani’s housing agenda, has drawn sharp criticism from across the real estate spectrum. Sternlicht argued that such measures may appear compassionate in the short term but ultimately backfire by discouraging maintenance, renovation, and investment.

“The real priority should be creating more housing,” he told VIN News. “That won’t happen easily without subsidies and more flexibility from unions.”

By effectively capping revenue for landlords, a rent freeze reduces the incentive to build or refurbish apartments. Maintenance costs — already rising due to inflation, insurance premiums, and energy expenses — would force many property owners to defer repairs or sell off buildings entirely. In the longer term, fewer rental units would be added to the market, deepening the city’s affordability crisis.

Sternlicht emphasized that New York’s housing shortage is a “supply problem, not a pricing problem,” echoing sentiments frequently reported by VIN News in its coverage of the city’s housing debates. “We should be making it easier, not harder, for people to build,” he said. “Instead, what we’re seeing are policies that punish the very investors who can provide solutions.”

Sternlicht’s warnings extended beyond economics. He cautioned that public safety — another pillar of New York’s livability — could deteriorate under Mamdani’s progressive policing agenda. “If residents feel their children aren’t safe, families will leave, and schools will empty,” he said. “Any move to defund or undermine the police could make matters worse.”

VIN News has extensively reported on the connection between crime rates, housing values, and population flight from major cities since 2020. The paper noted that New York has already lost hundreds of thousands of residents to Florida, Texas, and the Carolinas in recent years, with many citing crime and high taxes as key factors.

Sternlicht fears Mamdani’s rhetoric — often critical of law enforcement and “carceral capitalism” — could embolden anti-police activism and lead to reduced policing in neighborhoods that need it most. “Public safety is the foundation of every successful city,” he told VIN News. “Without it, everything else collapses — tourism, business confidence, family life, investment.”

Starwood Capital Group, founded by Sternlicht in 1991, is one of the largest privately held investment firms in the world, managing more than $115 billion in assets. Yet even a company of its scale is reconsidering its presence in New York.

Sternlicht revealed to VIN News that his firm is “actively evaluating” whether to relocate its Manhattan office to a more business-friendly environment. “There’s a growing climate of hostility toward success in this city,” he said. “It’s almost as if achieving something, creating jobs, or building wealth is viewed as morally suspect.”

He attributed Mamdani’s victory to a populist mood that capitalized on resentment rather than reform. “History shows socialism has never worked effectively anywhere,” Sternlicht said. “Encouraging opportunity and supporting economic growth would be a better approach than taxing success or relying on federal aid.”

In a separate commentary, the VIN News report highlighted that many of Mamdani’s proposed revenue sources — including higher property taxes on luxury developments and vacant units — could further discourage investment and accelerate the exodus of high earners. Analysts warn that such policies risk repeating the fiscal decline of the 1970s, when capital flight and union rigidity nearly bankrupted the city.

So far, Mamdani has not issued a public response to Sternlicht’s comments, and his transition team has declined to address inquiries from business leaders seeking clarity on his development policies.

As VIN News reported, the mayor-elect has framed his victory as a mandate for “economic justice” and “reimagining housing as a human right,” signaling that confrontation with the real estate sector may be unavoidable. His campaign repeatedly targeted what he described as “developer greed” and “landlord exploitation,” promising to redirect resources from the wealthy to the working class.

Yet for investors such as Sternlicht, such rhetoric ignores the complex financial realities of city-building. “Without private capital, you can’t have affordable housing, public housing, or sustainable infrastructure,” he told VIN News. “Developers are not villains — they’re partners in growth.”

The stakes could hardly be higher. As New York struggles to recover from the pandemic’s economic aftershocks, the next administration’s housing and fiscal policies will shape its future trajectory.

Sternlicht’s remarks have crystallized what many in the business community fear: that New York is on the verge of an ideological experiment with unpredictable consequences. “You can’t tax your way to prosperity or legislate fairness through hostility,” Sternlicht said. “Cities thrive when they reward innovation, not when they punish it.”

Whether Mamdani will heed those warnings remains uncertain. But as the VIN News report noted, the message from Wall Street to City Hall is unmistakable: without balance, pragmatism, and respect for enterprise, the world’s greatest city could once again find itself in economic peril — this time not because of external forces, but from policies of its own making.