Issue No. 24 - December 2024 The Rubin Report The Pulse of the NYC Development Market

Welcome to Issue 24 of?The Rubin Report: The Pulse of the NYC Development Market. As 2024 comes to a close, we stand at the dawn of a new era for the NYC development market — one that is more promising than ever. This year, we laid the groundwork for transformative change, and as we look toward 2025, it’s clear that the future is brighter than it has been in decades.

With the introduction of game-changing policies like the 485-x, 467-m, and the City of Yes (COY) 3-Prong initiatives — for Housing Opportunity, Economic Opportunity, and Carbon Neutrality — developers now have a comprehensive arsenal of tools to build with confidence.

What’s Driving This Optimism?

The incoming Trump administration, coupled with a one-party Congress, has set the stage for pro-development, pro-business policies. For the first time in years, property owners and developers have a sense of predictability and certainty about the macro market environment.

But beyond the political backdrop, it’s the specific local policy changes that are unlocking enormous potential for NYC development. Here's a quick overview of the key catalysts shaping 2025 and beyond.

485-x: Affordable Neighborhoods for New Yorkers (ANNY)

This is one of the most significant tax incentives in years, allowing for tax benefits of up to 40 years for qualifying developments. The program offers developers multiple pathways to achieve long-term tax benefits while supporting affordable housing.

Benefit Options:

• Option A: Build large rental projects (150+ units) with 25% affordable at 60% AMI for a 40-year, 100% tax exemption.
• Option B: Build rental projects (6-99 units) with 20% affordable at 80% AMI for a 35-year exemption (25 years at 100%, 10 years at 20%).
• Option C: Small rental projects (6-10 units) outside Manhattan receive a 10-year, 100% exemption.
• Option D: Develop homeownership units (condos) outside Manhattan, with purchasers benefiting from a 20-year exemption (first 14 years at 100%, then 25% for 6 years).

These program significantly reduces operational costs for developers and is expected to catalyze construction citywide.

467-m: Affordable Housing from Commercial Conversions (AHCC)

Aimed at unlocking NYC's vast supply of underutilized commercial properties, 467-m provides developers with incentives to convert these buildings into residential housing.

Key Features:

• Eligible Properties: Non-residential buildings (except hotels) built before 1991.
• Affordability Requirements: 25% of units at 80% AMI, with deeper affordability for 5% of units at 40% AMI.

Tax Benefits:

• 35-year exemption if the project starts by June 2026.
• 30-year exemption if started by June 2028.
• 25-year exemption if started by June 2031.

This tiered benefit system incentivizes developers to act quickly, offering early movers the most favorable terms.

City of Yes for Housing Opportunity (COYHO)

The most monumental zoning reform since 1961, COYHO is a complete rethinking of how NYC can unlock housing potential. This initiative directly increases housing capacity and makes it easier to build affordable, mixed-use, and shared housing models.

8 Key Changes to Zoning:

1. Universal Affordability Preference (UAP) — Increase in FAR and building height for affordable housing projects.
2. Accessory Dwelling Units (ADUs) — Homeowners can now create backyard cottages, basement apartments, and garage conversions.
3. Transit-Oriented Development (TOD) — Allows for mid-rise (3-5 story) development along transit corridors.
4. Campus Development — Faith-based organizations and large campuses can now fully utilize their development rights.
5. Parking Mandate Reform — Parking requirements have been reduced or eliminated in many areas, cutting construction costs.
6. New High-Density Zoning Districts — New zoning designations (R11 and R12) with FARs of 15 and 18, unlocking massive development capacity.
7. Legalizing Small Units —The minimum unit size rule in certain areas has been eliminated, allowing for more micro-units.
8. Residential Conversions — Streamlined process to convert commercial buildings into housing, with relaxed light and air standards.

COYHO is expected to increase housing production by over 82,000 units, making this one of the most transformative zoning changes in NYC's history.

City of Yes for Economic Opportunity (COYEO)

COYEO modernizes NYC's zoning code to better support business growth and adaptability. For developers, this opens up new possibilities for mixed-use, retail, and manufacturing spaces in areas that were previously limited.

What’s New?

• More Uses in More Places: Life sciences, micro-distribution, and nightlife uses now allowed in more areas.
• Adaptive Reuse: Vacant properties can be re-activated for commercial use without the two-year vacancy restriction.
• New Commercial & Manufacturing Districts: New C7 and "A" manufacturing districts offer higher FARs and flexible bulk controls.

This update provides an opportunity for developers to create more diverse spaces that serve modern business needs, making NYC more attractive for commerce and employment.

City of Yes for Carbon Neutrality (COYCN)

This policy positions NYC as a leader in sustainable development. Developers are now incentivized to incorporate eco-friendly upgrades that not only improve building performance but also reduce development costs.

COYCN Benefits for Developers

• Solar Canopies: Solar panels are now allowed on 100% of a rooftop, and solar awnings can be installed over parking.
• Building Retrofits: Exterior insulation retrofits no longer count toward FAR, so buildings can increase energy efficiency without reducing rentable space.
• EV Charging & Bike Storage: Parking areas can allocate space for EV chargers and bike storage, encouraging greener mobility options.
• Green Roofs & Food Production: Non-residential rooftops can now be used for urban farming, offering new revenue streams for owners.

This policy positions NYC at the forefront of sustainable development, and it provides new development incentives while lowering operating costs.

What Does This All Mean for You?

If you’re a property owner, developer, or investor, the message is clear:

The future of development in NYC is brighter than ever.

1. With new tax exemptions like 485-x and 467-m, many development projects, now “pencil out”.
2. With the City of Yes (COY) initiatives, zoning restrictions have been unlocked to allow for more common-sense development.
3. With the incoming pro-business administration, certainty in the market has returned.

This is your moment to act. The incentives are strongest for those who move early, and the changes made in 2024 are laying the foundation for the next decade of NYC development.

If you want to better understand how these changes impact your property or how to unlock its potential, Development Site Advisors? is here to help. We’re not “just brokers” — We Know Zoning?.

Reach out to me today to discuss your property, and real estate goals for 2025 and beyond.

Email: [email protected]

Call: (646) 775-3488

Here’s to building a better NYC, together.

P.S. Wait until you see our Whitepaper on the City of Yes! It will be an easy-to-follow guide on zoning unlike anything that exists today.

Rubin Isak

Managing Principal, Co-Founder

Development Site Advisors?

New Building Filings:

Spotlight on Queens & Manhattan

Queens:

1. 21-11 31st Street, Astoria- A DSA Exclusive Sale - Plans filed to build a new 7-Story, 65,431 ZFA, 86-Unit Luxury Condominium Building w/ Ground Floor Retail space on a Corner 18,757 SF Lot. Zoning: R6A/C1-3. Paid $21,000,000 or $321/ZFA on 10/27/2023.
2. 30-78 29th Street, Astoria - Plans filed to build a 7-Story, 18,620 ZFA, 27-Unit Building with 14 Parkin Spaces on a 6,213 SF Interior Lot. Zoning: R6A. Paid $5,300,000 or $285/ZFA on 11/17/23.
3. 43-12 50th Street, Sunnyside - Plans filed to build a 8-Story, 41,811 ZFA, 55-Unit Apartment Building on a 10,463 SF Lot. Zoning: R7A, C1-4. Paid $7,000,000 or $167/ZFA on 4/11/22.
4. 126-87 Willets Point Boulevard, Willets Point - Plans filed to build a 5-Story, 441,179 SF Soccer Stadium!

Manhattan:

1. 88 East 2nd Street, East Village - Plans filed to build a 7-Story, 19,457 ZFA, 22-Unit Mixed-use Building on a 4,308 SF Corner Lot. Zoning: R7A, C2-5.
2. 340 West 53rd Street, Hells Kitchen - Plans filed to build a 7-Story, 16,485 ZFA, 10-Unit Mixed-use Building on a 4,016 SF Lot. Zoning: R8/C1-5
3. 23 East 36th Street, Murray Hill - Plans filed to build a 10-Story + Penthouse, 35,809 ZFA, 26-Unit Apartment Building on a Corner 3,562 SF Lot. Zoning: C5-2. Paid $12,000,000 or $335/ZFA on 12/14/23.
4. 105 West 108th Street, Manhattan Valley - Plans filed to build a 12-Story, ?52,749 ZFA, Mixed-use Building. Zoning: R8A.
5. 1647 1st Avenue, Yorkville - Plans filed to build a 22-Story, 396,504 ZFA, 459-Unit Apartment Building w/ ground floor Retail on a 39,436 SF Lot. Zoning: C2-8A.
6. 288 East 88th Street, Yorkville - Plans files to build a 24-Story, 75-Unit, 106,913 ZFA Apartment Building on a 8,071 SF Lot. Zoning: C2-8/R8B.

FOMC Meeting Summary

The Federal Reserve held their FOMC meeting on 12/18/2024 and reduced the U.S. Federal Funds Rate by another 0.25 basis points, bringing it to 4.25%.

8 Key Takeaways from the meeting:

1. The economy is strong overall and has made significant progress toward our goals over the past two years.
2. Inflation has moved much closer to our 2 percent longer-run goal.
3. GDP rose at an annual rate of 2.8 percent in the third quarter, about the same pace as in the second quarter.
4. Growth of consumer spending has remained resilient, and investment in
5. In the labor market, conditions remain solid. The unemployment rate is higher than it was a year ago, but at 4.2 percent in November, it has remained low.
6. We have been moving policy toward a more neutral setting in order to maintain the strength of the economy and the labor market while enabling further progress on inflation.
7. If the labor market were to weaken unexpectedly or inflation were to fall more quickly
8. The FOMC believes that the appropriate level of the federal funds rate will be 3.9% at the end of 2025 and 3.4% at the end of 2026.

?Financial Market Snapshot:

• Federal Prime Rate: 7.5%
• Secured Overnight Financing Rate (SOFR): 4.61%
• United States Federal Funds Rate: 4.25% - The fed just cut rates another .25 basis points 12/18/2024
• United States Annual Inflation Rate: 2.75% - This represents the 2nd straight monthly increase after seeing 6-months of consecutive decreases.
• US 1-Year Treasury Rate: 4.305%
• US 2-Year Treasury Rate: 4.348%
• US 3-Year Treasury Rate: 4.342%
• US 5-Year Treasury Rate: 4.383%
• US 10-Year Treasury Rate: 4.486%
• Treasury Bill Auction Rates:

• 4-Week Term: 4.55%
• 8-Week Term: 4.50%
• 17-Week Term: 4.24%
• 26-Week Term: 4.2%
• 52-Week Term: 4.19%
• US Bonds:

• 20-Year Bond: 4.625%
• 30-Year Bond: 4.50%
• Mortgage Rates:
• 30-Year Fixed Rate: 6.93%
• 15-Year Fixed Rate: 6.20%
• 5-Year ARM: 6.84%
• Ground Up Construction Rates: 8.5%+
• Hard Money Lending Rates: 11%+

Find out what all these new changes mean for you. Ask me for a Sitestimate?, which is our proprietary Development Focused Valuation including Zoning, Massing & Feasibility Studies for your Property!

Rubin Isak

Managing Principal & Co-Founder

A: 275 Madison Avenue, 20th Floor NYC

M: 917-325-4672

D: 646-775-3488

O: 212-875-1800

E: [email protected]