A big trend in New York City for residential developers currently is buildings with 99 units in an effort to take advantage of a tax code while avoiding higher labor costs.
A report from Bloomberg, citing the Real Estate Board of New York, shows that local developers in the third quarter alone filed 21 applications to work on buildings with exactly 99 units. In context, this period alone exceeds the just 13 amount recorded between 2008 and 2023.
A reason behind this surge? The 485-x tax abatement program, which has been in place since April 2024, requires developers to make 20 percent of the residences in the projects affordable to take advantage of property tax exemptions.
That number goes up to 25 percent for projects with 100+ units. However — this comes with an extra caveat — the more units, the more labor costs spike. For example, 485-x eligible developments with 100-149 units require a minimum hourly wage of $40, with that number going up to $72 when the number hits 150 or more. Labor costs are especially a factor in decision-making — especially at a time when construction costs are sky-high in part due to the new tariffs imposed in 2025.
"Labor costs are a big part of any underwriting for these properties," Victor Rodriguez, senior director of analytics for CoStar's NYC market, told GlobeSt.
"New York is a very pro-labor town. It's built into the new taxes, the new incentives. You have to offer deeper affordability in perpetuity. And when you're constructing, know your site. You have to use needed labor."
Whether the trend around 99-unit projects sticks around, Rodriguez isn't so sure. But some might be rushing to take advantage of the benefits now as NYC Mayor-Elect Zohran Mamdani gets set to take office and uncertainty remains in the air with the incoming administration.
"I think New Yorkers or developers in New York City would probably want a seat at the table[to see] if there's any other kind of changes or provisions added to that incentive program," Rodriguez added.
But some NYC developers are betting on 99-unit developments and it remains to be seen whether this continues into 2026 and beyond.
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