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Market Report

New York Multifamily Market

2024 Investment Forecast

Tax Abatement Expiration Conflicts with
City’s Efforts to Grow Rental Inventory

State tax policy adversely affects city-backed housing initiatives. Market conditions remain remarkably tight, with the 1.8 percent vacancy rate at the start of this year tied with 2021 for the lowest rate in multiple decades. Though the city is consistently one of the nation’s most active major metros for construction, recent supply gains have trailed robust renter demand. In response, Mayor Eric Adams has proposed sweeping zoning changes to encourage development as part of the “City of Yes” program, which aims to support the completion of 100,000 apartments within the next 15 years. Still, state legislation has already impaired these attempts to grow the local apartment supply. According to data from the Real Estate Board of New York, the first eight months of 2023 noted an 81 percent drop in proposed units from the same period a year prior. This coincides with the expiration of the state’s 421-a tax exemption, which had substantially eased the financial burden of multifamily development. The full impact of these changes on the construction pipeline has yet to be fully released, but the sharp decline in construction filings could have an effect on the citywide delivery schedule as early as 2025.

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