New York’s real estate leaders are already over the 421a replacement.
MAG Partners chief executive officer MaryAnne Gilmartin said the 485x program “really needs to be reconsidered,” calling it unworkable for ground-up developers at a Crain’s and REBNY event this week.
“My hope is that we don’t live with this program for a decade,” she said.
The 485x incentive, included in last year’s state budget, was designed to revive affordable housing production after the 421a program expired in 2022. But its $40-per-hour minimum wage requirement on projects of 100 units or more triggered a flood of 99-unit proposals across the city, a workaround industry insiders say could cripple large-scale development.
CBRE’s Mary Ann Tighe, who heads the firm’s New York tri-state operations, put the numbers on stark display: New York would need 5,050 99-unit buildings to meet its housing needs.
“There’s an impulse to treat development punitively,” she said, pushing back on critics who see tax incentives as handouts. “We have to stop thinking about tax incentives as some kind of giveaway.”
Housing starts for market-rate units dropped 67 percent from last year, falling from an average of 7,500 per quarter since 2021 to 2,500 this year, according to CoStar data from last month. The pipeline of units under construction declined over the same period from 71,000 to 47,000, the Commercial Observer reported.
The frustration underscores the widening gap between Albany’s political calculus and developers’ financial realities. The wage mandate, combined with rising construction and financing costs, effectively sidelines much of the private sector from building rental housing at scale.
Still, optimism flickered. Tighe said Manhattan leasing and foot traffic have bounced back sharply since the pandemic, and that the city’s underlying resilience remains intact.
Tighe and Gilmartin’s comments also fed into a broader theme of the event: the need for structural fixes to facilitate housing construction.
Some panelists endorsed the charter reform ballot measures that could loosen the City Council’s grip over project approvals, arguing they might finally let pro-housing members vote “yes” without fear of backlash.
— Holden Walter-Warner
Read more
NYC apartment construction plunges as 485x fails to deliver
Bad news for developers: Why 485x will remain broken
The Daily Dirt: A multi-front fight against housing ballot measures
