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NYC developers shift away from studios under 485-x housing abatement
More than 90% of NYC housing permits filed in the first quarter of 2026 were for projects with 99 units or fewer, reflecting the 485-x prevailing wage constraints.
New York City apartment developers are building fewer studio units as they try to make the city’s 485-x tax abatement work, according to industry discussion at Bisnow’s 2026 New York Affordable Housing Conference. With the incentive’s prevailing wage requirements shaping project design, developers are often aiming at smaller buildings even when larger sites could support more apartments.
Speakers said that the new approach is changing the mix of affordable homes. Instead of projects skewing toward one-bedroom and studio units under the prior incentive, developers are trying to maximize site value by putting more bedrooms into the units they do build, which they said could mean more affordable homes for families.
The Real Estate Board of New York data cited at the conference showed that more than 90% of housing permit applications submitted in the first three months of 2026 were for developments with 99 units or fewer. Bisnow also highlighted that reporting from Gothamist put the impact at 538 fewer apartments than sites could have yielded.
Despite the constraints, panelists said development has not stopped, and in some areas has accelerated. Ariel Property Advisors founding partner Victor Sozio said the broader investment sales market is being supported by 467-m conversion site activity, while developers are also looking for sites that can become good 485-x projects, with Fogarty Finger’s Harshad Pillai noting at least two Manhattan projects left more than 40 units each unrealized by sticking to the 99-unit cap.