Scott Rechler, chairman and CEO of RXR, joins CNBC's 'Squawk on the Street' to discuss what's behind the surge in New York City commercial leasing activity, the potential impact of Zohran Mamdani's policies on real estate, and much more.

New York

Scott Rechler, chairman and CEO of RxR, has observed a notable surge in companies seeking office space in New York City, attributing the trend to the city's unique ecosystem and the demand for high-quality, well-located buildings. He highlights that this demand is particularly strong among firms involved in the AI sector, which require both talent and premium amenities.

Rechler also notes a shift in the market, with some lower-tier office buildings being converted into residential units, aided by new public policies offering significant tax abatements. He discusses the potential implications of upcoming political leadership in the city, emphasizing the importance of public safety and housing affordability, and the need for continued collaboration between city and state governance.

RXR chairman: We're seeing big surge of companies seeking NYC offices

RxR chairman and CEO Scott Rackler, he is one of the city's largest real estate owners, joins us now to talk about that and we sometimes get to some other things but good to see you. Good to see you too. I mean I can remember us having plenty of conversations and they've usually started on a fairly morose or dour or whatever we want to describe it. But I'm surprised at the level of optimism in this story today and or the numbers themselves. Are you surprised? Listen, I've been living it so I'm not surprised and you know even your last guest, everyone's talking about this AI revolution right and you think about what makes companies successful in AI, it's compute power and people power and Manhattan office buildings are the people data centers of the AI era and so what we've seen is this big surge of companies that are looking to grow. They need the talent and to be able to attract the talent they need the best space that's you know well located that has the best amenities and they want to in a city like New York that has this incredible ecosystem that you know brings together capital, people, customers, all these diverse industries so domain expertise that really you can't replace anywhere else in the country. Yeah that would seem to be the case. Now we've talked often though about the divergence between the A properties and everything else and even during the tougher times not that long ago the the best properties were still garnering significant leases. Has that changed? Are we starting to see it trickle down now given the scarcity? So there still is this flight to quality right as a matter of fact in the first nine months of this year they're like a hundred and forty leases signed at over a hundred hours a foot which is as many as all of last year but because it's such a scarcity of space of high-quality space you started to see a trickle down to a degree. There's some buildings that are still obsolete the good news there is there's other alternatives right there's things like conversions we spoke about in the past and you know there's been some good public policy put in place that specifically this 467 M which provides tax abatements that really has broadened the aperture of what buildings you can actually convert. So you can get more capital potentially to work because some of these as we pointed out are very expensive. That's right and and so now because of this this basically it's like 90% tax abatement for 35 years so things pencil out they didn't so we're for example converting five times square a building I never would have imagined that we convert to residential into 1200 units of residential and so there's right now like something like an estimate of 20 to 40,000 units of residential that will come from office buildings which is 20 to 40 million square feet of space. Well the shortage of housing certainly played a role and continues to play a role in the upcoming mayoral race here it's certainly one of the key reasons why a socialist was nominated to run to be the Democrats nominee. What's he going to do if as seems likely at this point still unclear but likely that he will become the mayor? Listen I mean that New York's in a unique spot and people don't appreciate it like different than LA and San Francisco a lot of the governance and oversight in New York City falls to the governor right you can't raise rent you can't raise real estate taxes you can't raise taxes fiscal responsibility public safety dollars that falls with the governor and the governor's been very clear that she's not going to let a mayor come in and raise taxes now where they have some capability is on rent particularly on rent regulated apartments there's a committee that the mayor appoints and he's been pretty clear that he wants to freeze rents now that's a formula that's been tried before and it's failed before because the way you actually create more affordability in housing is build more housing and so you know the hope is if he becomes mayor we got to convince him. Have you talked to him? I've met with him he's come to my office. What do you think? Listen I think you know he's he's moving away from being a politician running for office to someone that's got to govern and you know it's just Mario Cuomo used to say right you when you're when you politic you do that in poetry and you govern in prose right and I think you know he's trying to get there now the proof is gonna be in the pudding yeah and you know someone who loves New York I'll do whatever I can to try to help him be successful when he's not doing the right thing I'll make sure he knows that we don't think it's the right thing but we got to hold the governor accountable you know if things go bad in terms of public safety that's you know probably the biggest risk to the city and if we need help we get they may even turn to the president yeah we might although I mean to your point he will have a lot of influence over the NYPD so the mayor does and I think that's the area when I spoke to him like that's the most critical thing right if he loses that support if he doesn't make sure this city feel safe is safe and that the NYPD is behind him he's you know he's gonna be a one-term mayor

The U.S. military struck a fifth apparent Venezuelan boat allegedly carrying drugs, U.S. President Donald Trump announced on social media Tuesday. CBS News' Natalie Brand has more details.

Caracas

Trump says U.S. struck another alleged Venezuelan boat

News organizations including The New York Times, The Associated Press and Newsmax as well as ABC, CBS, NBC, CNN and Fox News say they will not sign new press rules as laid out in a Defense Department document. This could mean the Trump administration will evict reporters from the Pentagon.

Washington

Major U.S. news media outlets refusing to sign new Pentagon rules

Madagascar’s president ousted in a military takeover — Youth-led protests and parliament’s impeachment vote spark political turmoil.

Antananarivo

Madagascar's military seizes power, president ousted

Thousands of messages shared in a group chat of Young Republicans are revealing some racist thoughts that even they worried about being leaked. The exchanges obtained by Politico are part of a Telegram chat among Young Republican leaders in New York, Kansas, Arizona and Vermont. Jason Beeferman, New York state politics reporter for Politico, joins with more.

Politico exposes racist messages sent by Young Republican leaders

The U.S. stock market rebounded on Monday (October 13) after President Trump appeared to walk back imposing new tariffs on Chinese goods.

Markets rebound after Trump softens tone on China tariffs

U.S. President Donald Trump is heading back to the U.S. after his whirlwind trip to the Middle East, where he celebrated the first phase of a peace plan between Israel and Hamas.

Sharm El-Sheikh

Middle East Conflict

Trump, world leaders sign Gaza peace plan and discuss next steps

The government shutdown entered its third week on Monday as the Senate is set to reconvene on Tuesday. CBS News' Nikole Killion has more from Capitol Hill.

Shutdown drags into third week as Senate set to reconvene

U.S. President Donald Trump was greeted in Tel Aviv with cheers and a military ceremony as he met families of hostages held in Gaza and addressed Israel's parliament. He now travels to Sharm El Sheikh, Egypt, to join world leaders in discussions on Gaza's future.

Tel Aviv-Yafo

Trump meets with Israeli leaders and hostage families

Twenty living hostages were released by Hamas after more than two years in captivity as a ceasefire continues to hold. Families in Israel describe emotional reunions while others continue to await confirmation about missing relatives.

Families reunite as ceasefire brings hostages, prisoners home

Israeli officials have confirmed that all 20 living captives have been released in Gaza.

Israel confirms all 20 living captives in Gaza have been released

The carefully choreographed Israel-Hamas exchange is underway, with Israel set to release around 2,000 Palestinian prisoners following the release of remaining hostages held in Gaza. Noga Tarnopolsky reports from Tel Aviv’s Hostage Square.

Israel-Hamas swap begins as 2,000 Palestinian prisoners set for release

Following his visit to Israel, President Trump will stop in Egypt to co-host a major summit in Sharm el-Sheikh alongside Egyptian President Abdel-Fattah el-Sissi. The meeting will bring together leaders from more than 20 countries to discuss efforts toward peace in Gaza and the wider Middle East.

Donald Trump to co-host chair Gaza peace summit in Egypt

The French presidency announced Prime Minister Sebastien Lecornu's new cabinet line-up on Sunday (October 12), with most top jobs remaining unchanged at a time when opponents are demanding a political shift to win their support for urgent budget talks.

Paris

French presidency unveils new cabinet as budget pressure intensifies

Seven captives have been handed over to the Red Cross, who will facilitate their transfer to Israeli forces.

Israeli military says Red Cross has received 7 captives in Gaza

On his way to the Middle East, U.S. President Donald Trump told reporters he expects the ceasefire between Israel and Hamas to hold, despite concerns Hamas won’t abide by the deal.

Trump says the 'war is over', Gaza rebuild to start immediately

China on Sunday (October 12) called U.S. President Donald Trump's latest tariffs on Chinese goods hypocritical and defended its curbs on exports of rare earth elements and equipment, but stopped short of imposing new levies on U.S. products.

Beijing

Global Tariffs

Beijing blames U.S. for trade tensions, defends rare earth curbs

Afghanistan and Pakistan said they killed dozens of each other's troops during a night of heavy border clashes between the two countries. Afghanistan's Taliban forces launched attacks on Pakistani troops along their shared border in what it called "retaliation for air strikes carried out by the Pakistani army on Kabul".

Chaman

Border clashes between Afghanistan and Pakistan leave dozens dead

A ceasefire between Israel and Hamas held in Gaza for a third day ahead of the expected release of Israeli hostages and Palestinian prisoners and an address by U.S. President Donald Trump to Israel's parliament.

Ceasefire holds in Gaza ahead of hostage release, Trump visit

Zelenskyy called Trump for a second consecutive day to discuss defence and Ukraine's energy sector. It comes as Russia further intensifies its attacks on Ukraine's critical infrastructure ahead of its harsh winter.

Kyiv

Ukraine Invasion

Zelenskyy has second call with Trump amid Russian strikes

On Sunday, the minister of armed forces in Madagascar acknowledged an officer selected by a military group supporting demonstrators calling for President Andry Rajoelina to resign as the country's new army chief.

Madagascar’s president says coup underway

With a trade war between the U.S. and China intensifying ahead of a Nov. 1 tariff deadline, there’s growing concern Beijing will use Taiwan as a bargaining chip.

Taipei City

Growing fear China will use Taiwan to bargain with U.S.

In a televised address ahead of the planned release of Israeli captives and Palestinian prisoners, Israeli Prime Minister Benjamin Netanyahu called for unity despite ongoing divisions.

Netanyahu urges Israel put aside ‘differences’ with Gaza

U.S. President Donald Trump blamed Democrats for his decision to lay off thousands of workers across the U.S. government as he followed through on his threat to cut the federal workforce during the government shutdown.

Trump lays off thousands of U.S. government workers amid shutdown

Thousands gathered in Tel Aviv as 48 of the last remaining hostages are expected home after two years of the Israel-Hamas war. The crowd cheered Donald Trump as the peace deal's broker but there were jeers for Israeli Prime Minister Benjamin Netanyahu.

Tel Aviv braces for hostage release planned for Monday

Diane Keaton, the Oscar-winning star of Annie Hall and The Godfather films, died Saturday at the age of 79, according to U.S. media reports. Entertainment journalist Johanna Schneller remembers Keaton as 'feisty and funny'.

Hollywood

Oscar winner Diane Keaton dead at 79

Former President Biden is now receiving radiation and hormone therapy to treat his prostate cancer, an aide said. The cancer is considered aggressive.

Biden receiving radiation, hormone therapy to treat aggressive cancer

It is unclear how many people were inside the Tennessee plant that exploded on Friday, but at least 16 people were reported on Saturday. Sheriff Chris Davis announced that there are no survivors. Nicole Valdes reports.

Tennessee

No survivors in Tennessee plant explosion, sheriff says

Thousands of pro-Palestinian protesters in London marked two years since the War in Gaza. However, the British government has seen enough. Haley Ott reports that police have been given sweeping powers to curb repeated demonstrations.

London

British Parliament designates Palestine Action a terrorist organization

Middle East Envoy Steve Witkoff has addressed hundreds of thousands of Israelis in what's known as “Hostages Square” in Tel Aviv. Witkoff hailed President Donald Trump for securing the ceasefire. The crowd was less receptive to his praise for Benjamin Netanyahu.

U.S. envoy booed for praising Netanyahu at Tel Aviv rally

A ceasefire is in effect between Hamas and Israel after just over two years of war. An exchange of Israeli hostages and Palestinians held prisoner is set to take place in the coming days, and U.S President Donald Trump is set to visit the region on Monday.

Breakdown