New York City’s office market is, surprisingly, showing signs of strength — even as concerns grow that Mayor Zohran Mamdani’s policies could accelerate a longer-term corporate exodus from the nation’s financial capital, CNBC reports.
Fears that businesses could flee the city have become a defining backdrop early in Mamdani’s tenure, with each major real estate decision scrutinized as a signal of whether the Democrat Socialist’s tax and regulatory agenda will push companies elsewhere.
That debate intensified following recent reports that private equity giant Apollo Global Management is considering adding a second headquarters outside New York, potentially in Florida or Texas.
At the center of the policy fight is a projected $5.4 billion budget deficit, which Mamdani has pledged to address largely by raising taxes on high earners and corporations. The approach has already triggered resistance from New York Governor Kathy Hochul, who has said she will not support such increases.
If Mamdani is unable to secure higher taxes on the wealthy, he is expected to turn to raising property taxes — a move that would not only hit landlords but also ripple through to everyday New Yorkers in the form of higher rents and housing costs.
Business leaders warn the consequences could extend far beyond commercial real estate and Wall Street.
“It’s a fragile environment today, and we should be careful with this budget,” said Steven Fulop, CEO of the Partnership for New York City.
In a recent op-ed, he cautioned that higher taxes would ripple across the entire economy. “With New Yorkers already leaving the state in search of a lower cost of living, further raising prices could send even more folks packing and undermine the state’s long-term economic growth,” Fulop wrote.
Despite those concerns, the office market itself is holding up — at least for now.
Data from commercial real estate firm JLL shows leasing activity in Manhattan remains strong, with 8.5 million square feet leased in the first quarter, vacancies falling to 13.5%, and rents rising 3.5% year over year.
Major companies are still committing to premium, long-term space, including AI start-ups.
American Express announced plans to build a new headquarters in lower Manhattan, reinforcing confidence in the city’s financial district, while Bank of America recently signed a 20-year lease for its New York office footprint.
“Even with the economic uncertainty increasing almost daily, first quarter 2026 NYC office leasing activity was strong,” noted JLL vice chairman Evan Margolin, adding that New York remains a critical hub for large corporations.
Yet executives are increasingly cautious.
JPMorgan CEO Jamie Dimon warned in his annual shareholder letter that while New York offers unmatched talent, it also carries the highest combined tax burden in the country. “Companies need to remain competitive in this very tough, fast-moving world,” he wrote, noting that the shift of jobs to lower-cost regions like Texas “will likely continue.”
In fact, JPMorgan now employs more workers in Dallas than in New York. Cathie Wood’s ARK Investment relocated to Florida,, and Citadel shifted its headquarters to Miami. Wells Fargo is moving its wealth division to West Palm Beach,
“Large companies [are] certainly exploring other options: cheaper labor costs, lower taxes, less political uncertainty,” said Vikram Malhotra, managing director, real estate equities at Mizuho.
Still, landlords are benefiting from a surge in demand for premium office space, driven in part by the rapid expansion of artificial intelligence firms. Leasing activity from AI companies has surged, with firms racing to secure space — including record-setting deals like Nscale’s lease at One Vanderbilt.
But that boom comes with risks. Margolin noted the trend bears similarities to the dot-com era, when rapid expansion ultimately gave way to a downturn.
Dimon also pointed to history as a warning.
In the 1970s, New York nearly went bankrupt under Mayor Abe Beame, as rising costs drove companies out of the city. “No city — or company or country — has a divine right to success,” Dimon wrote.
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