NYC’s Multifamily Market: Waiting to Exhale

April 3, 2026

Executive Insights Development Featured Finance & Investment More New York Northeast

GAIA Real Estate CEO Danny Fishman on why policy clarity will be key to restarting investment and development in the Big Apple.

“If policy stabilizes, the city could regain its historic safe-market appeal,” said Fishman. Image courtesy of GAIA Real Estate

New York City’s multifamily sector is once again at an inflection point. With a new administration in place and policy discussions around property taxes, rent regulation and broader housing rules underway, investors and developers are reassessing risk, underwriting assumptions and the outlook for new development.

In a market long viewed as one of the safest in the country, shifting policy signals are now directly shaping how capital is priced and deployed.

Danny Fishman, co-founder & CEO of GAIA Real Estate—a locally based real estate firm with more than $4 billion in assets under management and a national portfolio of 20,000 units—breaks down what “policy clarity” means for multifamily feasibility in New York City. He also discusses how lenders and investors are responding to the current environment and where activity could return first if conditions improve.

When policy priorities shift, which underwriting assumptions do you revisit first?

Fishman: The largest expense for any building is property tax. With the current uncertainty, taxes could increase to as much as 10 percent, which already puts us in a difficult and unpredictable position. In today’s New York City market, the risk premium is at least 0.5 percent on the cap rate for free-market assets and around 2 percent for rent-stabilized properties.

Manhattan historically had the lowest cap rates in the U.S. and was considered one of the safest investment markets. The current environment signals a significant shift from that long-standing perception of stability.

What would count as a positive signal that the market is becoming more predictable under the new administration?

Fishman: Consistency between political messaging and actual implementation, particularly around taxes and rent policy, would be the clearest signal. Real estate development is an inherently long-cycle business and built over a span of 5 to 10 years or more. Because of that, investors and developers are less concerned with whether policy is perfectly favorable and more concerned with whether the rules of the game are clear, durable and applied consistently.

image of 55 Hope Street — 55 Hope Street is a 117-unit Class A multifamily property in Williamsburg, Brooklyn, acquired by GAIA in 2022. Originally a pencil factory, the building was converted into condo-style apartments with high ceilings, oversized windows and high-end finishes. *Image courtesy of GAIA Real Estate*

What kinds of policy clarity does the market respond to most, and how does that typically affect investment and development decisions?

Fishman: The market tends to respond most strongly to policy clarity around property taxes and rent regulations. Those two factors have the largest direct impact on the long-term economics of housing in New York City.

When investors, lenders and developers have a clear understanding of how property will be taxed and how rental income will be regulated, they can underwrite projects with greater confidence and less risk. Uncertainty in either area tends to slow investment decisions and delay new development.

Tell us more about the implications of this uncertainty.

Fishman: Developers are prioritizing projects that include subsidies or tax abatements because they provide more predictable economics. When a project offers incentives, such as setting aside affordable units in exchange for property tax relief, it removes one of the largest cost variables in real estate, making underwriting hold periods and long-term returns more certain.

At the same time, many investors are taking a wait-and-see approach until there is greater clarity around policy. Sponsors are closely watching deal volume and the appetite of institutional capital, which ultimately drives acquisitions, development financing and exits. While projects already underway will continue to completion, uncertainty is likely to slow new development and acquisitions because investors simply do not know what assumptions to use in their financial models.

How do you separate policy headlines from decision-useful signals when evaluating whether to pursue or pause a deal?

Fishman: GAIA focuses on enacted policy and lender behavior. With the proposed 9.5 percent property tax increases, restrictions on rent growth and increasingly difficult eviction processes, it’s difficult to ignore how these factors push investors to demand a higher risk premium. Elevated political risk is causing many deals to no longer pencil, even in otherwise stable markets.

How does your strategy position GAIA during a transition period like this?

Fishman: By using a lower-leverage approach, which allows GAIA to operate effectively in a high-interest-rate environment, we continue distributing rental income and dividends to investors while reinvesting cash flow into property upgrades and value creation.

We are also expanding to South Florida and opened GAIA’s first Miami office at the start of 2025 after 16 years of being primary based in New York. The move aligns with our investment growth strategy, which is centered primarily on opportunities in South Florida and the Sun Belt. (It) includes the firm’s joint venture with Moderno—focusing on developing emerging neighborhoods and single-family investment in Miami and its fully discretionary REIT focused on multifamily rentals in the Sun Belt and South Florida—and GAIA’s core business of value-add multifamily and distressed assets.

Since the acquisition, GAIA has stabilized and upgraded 55 Hope Street, including improvements to the rooftop and tenant amenities, and extended the building’s loan maturity with Raymond James Bank. *Image courtesy of GAIA Real Estate*

How could the Big Apple regain its historic “safe haven” appeal if policy stabilizes?

Fishman: In New York City, the primary issue is political risk. These factors push investors to demand a higher risk premium. If policy stabilizes, the city could regain its historic “Swiss bank”-level, safe-market appeal.

When confidence improves, what usually moves first in the market—equity, lenders, pricing or developers restarting projects?

Fishman: Equity stepping back. There is a lot of sophisticated capital that tends to move ahead of the curve and is actively looking for opportunities. Lenders, however, are typically slower to react, while many sellers are still relying on market data that lags several months. At the same time, even when conditions begin to improve, it takes time for developers to restart paused projects due to the complexity of the development and approval process.

How are projects that are already in pre-development or awaiting approvals being handled right now?

Fishman: For (such) projects…, many sponsors are proceeding cautiously or slowing decisions until there is greater clarity around taxes, rent policy and the broader regulatory environment.

Because property taxes are already one of the largest expenses in a building, even the possibility of increases can significantly affect a project’s feasibility, making it difficult to underwrite costs and returns. As a result, some developers are delaying or reassessing projects, while those with approvals, financing or incentives such as tax abatements are more likely to move forward since those programs reduce uncertainty and make underwriting more predictable.

And how are lenders structuring development financing in New York City today compared to two or three years ago?

Fishman: Lenders today are generally structuring construction and development financing more conservatively than they were two or three years ago, largely because of the policy and tax uncertainty surrounding New York City’s multifamily market. …

Pricing has also widened to reflect the additional perceived risk. As a result, lenders and investors are being far more selective, with capital more likely to flow to projects that have clear incentives, such as tax abatements or subsidies, or that already have approvals and a well-defined path to completion.

If New York City does regain momentum, where do you expect it to show up first across multifamily activity and why?

Fishman: New starts. The primary reason is the tax abatement and the clearer rent guidance, which provide more certainty for developers and investors. In New York City’s current environment, certainty around operating assumptions is critical. …