Multifamily construction in New York City has reached its lowest point since 2011, with only 894 units starting foundation work in the third quarter of 2025, according to CoStar data provided to The Real Deal. Despite this downturn in actual construction starts, developers proposed a significantly higher number of new units during the same period.
The Real Estate Board of New York (REBNY) reported that developers filed permits for 11,746 multifamily units last quarter, marking a 69 percent increase from the previous quarter. This figure is the highest since early 2022 and moves closer to the pace needed to achieve the city and state’s goal of building 500,000 new homes.
However, experts caution that not all proposed units will be built due to financial and legal challenges that can arise between filing permits and beginning construction. Henry Perez-Tlatenchi, senior data and policy researcher at REBNY, said, “You’re starting to see a jump start of people who were essentially waiting for the economics of development to work out.”
A contributing factor to the recent rise in proposals is the reintroduction of tax abatement programs aimed at encouraging rental housing development. Developers previously rushed to qualify for the now-expired 421a tax abatement program before it ended in summer 2022. After a slowdown in activity, passage of the state’s new 485x tax abatement program in late 2024 helped revive permit filings.
Other policy measures at both city and state levels have also played a role. Initiatives such as Mayor Eric Adams’ City of Yes plan are designed to promote greater density and spur additional unit proposals.
Victor Rodriguez, senior director of analytics at CoStar, noted: “We know that permits will eventually lead to some more units. But the biggest question is, how many and when?”
Despite increased filings overall, large-scale developments remain scarce. Of the 207 multifamily buildings proposed last quarter, only 13 would contain more than 100 units—a figure recently corrected by The Real Deal from an earlier report of 12 such projects.
Perez-Tlatenchi attributed this trend to requirements under the new 485x program: “Developers planning to build more than 100 units need to comply with construction wage requirements to participate in the tax program.” These wage rules add compliance costs that can make larger projects financially unfeasible.
In certain areas like Williamsburg, Greenpoint, and Long Island City, rental projects with at least 150 units must pay workers between $64 and $74 per hour depending on location. REBNY estimates this increases costs by nearly one-third compared with previous incentive programs.
While midsize projects contributed substantially toward meeting housing targets this quarter, Perez-Tlatenchi warned that may not be sustainable: “Historically, what has driven our residential development, and the numbers behind that, has been large-scale development,” he said. “And it’s clear that’s not happening.”
