Investors have taken notice while Letitia James is doing a victory lap around the courthouse to celebrate her “victory” in former President Donald Trump’s civil fraud case, and their attention to the case’s outcome spells financial disaster for the already struggling Big Apple.
On Monday, FOX Business host Charles Payne said investors who will now avoid New York are “absolutely right.” Payne pointed out that approximately $1 trillion in business has already departed New York, relocating to friendlier business environments like Florida and Texas. He highlighted that Manhattan skyscrapers are currently operating at around 50% capacity and suggested that it’s doubtful they will return to full occupancy anytime soon.
Payne echoes the sentiments of many previously gung-ho investors looking to plant roots in New York City. Kevin O’Leary, “Mr. Wonderful” on Shark Tank and chief of O’Leary Ventures, suggested that potential investors should “take out the Trump factor” of the equation and consider the implications solely as if Trump were any other real estate developer in New York.
O’Leary called Judge Arthur Engoron’s arbitrary assignment of more than $355 million in fines to settle Trump’s case an “assault on real estate.” “New York was already a loser state, like California is a loser state. There are many loser states because of policy, high taxes on competitive regulation,” O’Leary said. ‘I would never invest in New York now. And I’m not the only person saying that.”
O’Leary points to Trump’s case as an example of something happening daily in real estate development. He explains that the process for getting a loan involves haggling over the valuation of assets to be used as collateral. O’Leary now notes that a precedent has been set to categorize the haggling portion of the deal as fraudulent and said that New York has now surpassed California as the biggest “loser state” for investing.
And he’s not alone. The fallout from James’ “victory” starts as a ripple but will most likely end in a tidal wave of missed business opportunities and fleeing businesses.
Cardone Capital’s Grant Cardone is slamming on the emergency brakes following the verdict. “I’ve been waiting for 40 years now to invest in that marketplace. I was completely confident this was the year to come,” Cardone explained. “And when that ruling happened, it was like, pencils down. Don’t touch it.” Cardone made waves recently with a post on X stating that he would discontinue all New York City real estate underwriting and focus on friendlier markets like Florida and Texas.
Cardone agrees with O’Leary’s assessment of New York’s views of property values. He notes numerous appraisals could be performed on the collateral and that every investor pushes the price up based on future value, not “fraud.”
Legal experts predict that other New York enterprises will realize that they, too, could suddenly be put out of business and hauled to court by the state on a “political whim.” George Washington University Law Prof. Jonathan Turley noted, “ In the name of protecting businesses in New York, you probably just led to hundreds of businesses looking at potential rentals in Florida because they look and they go, ‘wow, if we fall on the wrong side of the politics in New York, they could sell us off for spare parts.’”
Trump will most likely pull his investments from New York, hitting the struggling city squarely in its pocketbook. His most iconic and valuable property is Trump Tower, a 58-story skyscraper on Fifth Avenue that serves as his primary residence and the headquarters of the Trump Organization, currently estimated as worth around $288 million. Trump also operates a public golf course in the Bronx, called Trump Golf Links at Ferry Point, leased under a 20-year contract with the city and worth about $5 million.
Trump also co-owns several hotel and condominium complexes in the city, such as the Trump International Hotel and Tower near Central Park, Trump Park Avenue on Park Avenue, Trump World Tower near the United Nations headquarters, Trump Parc and Trump Parc East on Central Park South, and Trump SoHo in SoHo. These properties vary in size and value, but according to Bloomberg, Trump’s stake in them ranges from $5 million to $176 million.
Based on these estimates, Trump’s total investment in New York City could be around $1 billion, a hard loss for the city should he pull up stakes.
The civil fraud case against Trump has sent a chilling message to the business community in The Big Apple. Once the world’s financial capital, New York may face a bleak future of decline and stagnation. As wary investors pack up and leave, they will take what’s left of the city’s vitality and prosperity with them.
