NYC Affordable Housing Weathers the Storm
Despite financial challenges, it’s still a promising sector in the Big Apple, said experts at Ariel Property Advisors' latest event.
Robust demand and an extensive series of housing development incentives and initiatives are keeping the hopes of New York City-focused affordable housing developers alive, despite persistent macroeconomic headwinds. This was the key takeaway from Ariel Property Advisors’ first Coffee and Cap Rates event of 2025, hosted in Midtown Manhattan on Wednesday.
The city’s fundamentals do wonders for developer sentiments. According to data from Ariel’s 2024 year-end sales report, the city saw $8.9 billion worth of transactions in 2024, a 14 percent increase from 2023. Rent stabilized assets accounted for nearly a third of this volume, while affordable housing properties made up just 5 percent.
Despite difficulties for long-term rent growth under the Housing Stability and Tenant Protection Act of 2019, “developers are attracted to high rents in low supply environments,” according to Shimon Shkury, the company’s president and founder. Believing that HSTPA is “not sustainable,” Shkury stated that lifting regulations while incentivizing development are the keys to bringing down rents while making development more financially justifiable.
On Shkury’s watchlist are Local Laws 97, 88, 18, 126 and the recently implemented congestion pricing scheme, which may potentially put dampers on development. However, these regulations may be offset by the sheer amount of demand, as well as initiatives such as the City of Yes, which could relax zoning laws.
As for his firm’s own approach towards investment sales, “we are moving from defense to offense,” Shkury said.
Making affordable development work in NYC
The view on affordable housing construction in New York City from ground level is a similar story. Developers view any successful affordable project as more of a product of sound policy and collaboration between public and private entities.
“It’s a product whose rents are artificially suppressed below market levels, and it’s a tremendous effort to come up with the right policies,” said Eli Wiess, a principal at Joy Construction.
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As for examples of sound policy, panelists highlighted the City of Yes zoning reform, Private Finance Housing Law Section 610 and the 421-a tax exemption as landmark policies in facilitating development. For context, New York City has not had any zoning reform since 1961.
“City of Yes was a great compromise that allowed more housing to be built across the city and allowed for flexibility on a number of different points,” from enabling accessory dwelling units at new developments, to cleaning up regulations around smaller micro units, according to Brendan McBride, senior development director at Gilbane.
Rolling with the punches
Despite open-mindedness from elected officials and non-profits, developers are still coping with more structural challenges to development.
“Costs are higher, NIMBYism is up and agencies are understaffed,” said Tell Metzger, a principal at the Community Preservation Corp. “It’s all a supply-driven effort because there are not that many other options and levers to push. Anything in City of Yes would be completely shot down by committee if it were bought up by itself.”
Even Section 610, which allows owners to collect rental subsidies that are above the rent limit, just point to the persistent difficulties associated with keeping communities affordable.
“610 is a great help and a way to help benefit more from subsidies, but there are real structural issues where it is not the whole thing,” Weiss said. “It’s a lifeline, but there is a lot of swimming left to do.”
But outside of favorable policy, demand alone is often enough to bring a project across the finish line. “I will tell you that I am leasing up a building in Inwood that has 611 apartments, and I will take in over 100,000 applications for people to live there,” Weiss detailed.
