Since New York City introduced the 485-x tax incentive, it’s become clear that the program isn’t delivering the results many had hoped for.
The initiative was launched with bold intentions—most notably, a pledge to help facilitate the creation of 500,000 new housing units by 2032. But nearly a year in, the reality tells a very different story. According to recent reporting, just 118 developments encompassing around 2,600 housing units have enrolled in the program—barely scratching the surface at just over half a percent of the city’s ambitious target.
Perhaps more concerning is what the data suggests about developer behavior. Due to strict labor cost requirements—particularly a $40-per-hour wage mandate for larger developments—not a single project to date has exceeded 100 units. In fact, some developers have gone as far as designing projects with exactly 99 units to avoid triggering the higher wage requirements.
This isn’t a fluke. It’s a clear signal from the market: the current structure makes it financially unworkable to build at the scale New York so badly needs. Developers are already grappling with inflation, elevated interest rates, growing insurance costs, and new tariffs on essential materials. Adding a rigid wage standard on top of these pressures simply makes many projects unviable—especially the mid- and large-scale housing that is crucial to easing the city’s housing shortage.
While a few high-profile projects—like a 1,200+ unit tower in Downtown Brooklyn or Related Companies’ massive 4,000-unit complex—show what’s possible with institutional resources and strong political backing, they are the exception, not the rule. For the majority of builders, especially those operating without significant subsidies or partnerships, the math under 485-x just doesn’t work.
New York’s housing challenges won’t be solved by isolated, one-off developments. We need policies that drive volume, speed, and long-term affordability. Yet only a fraction—just 540 units—of those created under 485-x so far are permanently affordable, undermining the program’s social impact.
This isn’t a call to return to outdated policies or unchecked giveaways. It’s a plea for a realistic incentive framework—one that supports affordability at scale, allows for flexibility on labor requirements, and aligns with the economic constraints developers actually face.
We need to reset. That means bringing developers, labor leaders, city officials, and communities back to the table to design a version of 485-x that serves everyone’s interests.
Because right now, it’s falling short for everyone.
If you’re active in New York City’s construction and development space and want to stay informed on what this means for your projects, let’s connect.
