Multifamily construction activity in New York City is contending with record lows — but could be showing some signs of life.
The third quarter of 2025 saw the lowest number of multifamily construction starts in the city since 2011, according to CoStar data shared with The Real Deal. Only 894 units began foundation work last quarter.
However, the number of units proposed by developers surged in the same period, according to separate data from the Real Estate Board of New York published Wednesday. Developers filed permits for 11,746 multifamily units in the period, a 69 percent increase from the prior quarter.
That number is the highest since the first quarter of 2022 and approaching the number of units that would need to be built each quarter to reach the city and state’s moonshot housing goal of 500,000 new homes.
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To be sure, not all of those proposed units are likely to be built. Developers often face financial and legal hurdles in the time between filing permit applications for a project and starting the foundation.
But the boost in filings likely reflects how city and state policies are encouraging new housing, said Henry Perez-Tlatenchi, senior data and policy researcher at REBNY.
“You’re starting to see a jump start of people who were essentially waiting for the economics of development to work out,” said Perez-Tlatenchi.
Part of the resurgence in proposed multifamily construction is the return of a tax abatement program for rental housing.
Proposed rental units peaked in early 2022, as developers raced to qualify sites for the 421-a tax abatement program, which paused property taxes for certain rental buildings that had started construction by that summer.
But unit proposals flagged after that, as developers faced an uncertain tax future. In late 2024, the state passed the 485-x tax abatement program, which has since restarted the development pipeline.
Other city and state policies, including those proposed in Mayor Eric Adams’ City of Yes plan, have encouraged density and, thus, more unit proposals.
“We know that permits will eventually lead to some more units,” said Victor Rodriguez, senior director of analytics at CoStar. “But the biggest question is, how many and when?”
And, despite the overall resurgence of filings, the pipeline for large-scale development appears to have taken a hit. Of the 207 multifamily buildings proposed last quarter, only 12 were planned for more than 100 units.
That’s largely due to the specifics of the new 485-x program, according to Perez-Tlatenchi. Developers planning to build more than 100 units need to comply with construction wage requirements to participate in the tax program. That adds compliance costs, and for really large buildings, makes projects difficult to pencil out.
Rental projects of 150 units or more in high-demand areas of Manhattan, Brooklyn and Queens need to pay construction workers either $64 and $74 per hour to participate in the program, depending on location. That increases costs by 29 percent in Williamsburg, Greenpoint and Long Island City over the previous tax incentive program, according to REBNY estimates.
Although midsize development powered the city to approach its housing goals this quarter, that might not continue, Perez-Tlatenchi said.
“Historically, what has driven our residential development, and the numbers behind that, has been large-scale development,” Perez-Tlatenchi said. “And it’s clear that’s not happening.”
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