Media Mentions

NEW YORK — Mayor Eric Adams is pushing to dramatically increase housing construction in Manhattan. If the borough's last rezoning is any indication, it will be a heavy lift.

Just three projects comprising about 300 apartments have obtained building permits since the December 2021 rezoning of ritzy Soho and Noho, two of the city’s wealthiest neighborhoods. That’s out of about 3,000 estimated to come online over 10 years.

While any land use plan is a longer-term endeavor that doesn’t necessarily yield immediate results, the meager sum stands in contrast to the rezoning of Gowanus, where 7,400 apartments have already been permitted amid a massive building frenzy. That rezoning was projected to create 8,000 apartments over 15 years in the formerly-industrial Brooklyn neighborhood. The plan was approved just weeks before the Soho proposal.

Adams unveiled an ambitious goal earlier this month to spur the construction of 100,000 apartments in Manhattan over a decade through plans like a recently-announced effort to make way for more development in Midtown South. That city-led rezoning, which is set to begin public review on Tuesday, is expected to generate 10,000 apartments over a decade.

The plan in Soho and Noho started as an effort to tackle outdated land use rules — which included, for example, an inexplicable restriction on ground-floor retail in a major shopping district. It later evolved to include upzoning for new housing, as officials eyed an opportunity to diversify the high-income area. The proposal took on larger significance on fair housing grounds as one of the only rezonings under Mayor Bill de Blasio in a majority-white neighborhood.

But the plan was limited by a range of factors and illustrates the difficulty of predicting outcomes from initiatives that rely on private developers and landowners.

For one, any new rental housing — especially development under the city’s mandatory inclusionary housing program — typically requires a tax break in the vein of the former 421-a incentive. That program expired in June 2022 and was not replaced for almost two years, until this past April. Developers are skeptical of the new incentive though, and say it introduced too many costly requirements, especially for larger projects in high-rent neighborhoods like Soho.

Additionally, in Gowanus, many builders were sitting on their sites for years in anticipation of the rezoning, ready to develop them as soon as the proposal was approved. Because of the yearslong lead time, developers were also able to get their projects started early enough in order to qualify for the old 421-a program, which was viewed more favorably by the industry. Since the housing element was introduced later in the Soho planning process, that rezoning didn’t have the same pipeline of shovel-ready projects when it passed.

"Not having a 421a replacement certainly didn’t help in terms of [mandatory inclusionary housing] needing a tax tool, and there wasn’t one in this neighborhood or citywide,” Basha Gerhards, senior vice president of planning at the Real Estate Board of New York, said in an interview.

To complicate matters further, much of the building stock in Soho and Noho is closed off to redevelopment due to landmarking, leaving relatively few sites with potential for mixed-income development.

“Fundamentally, the Soho/Noho rezoning is constrained for housing production because three-quarters of it is landmarked,” Gerhards said. “So this was not expected to be the big producer of housing that we see and have come to expect from other neighborhood rezonings.”

Indeed, experts see more development potential in other parts of Manhattan, namely Midtown.

In Soho, even for sites where the buildings themselves are not landmarked and can be redeveloped, being located within the historic district still means an additional layer of approvals through the Landmarks Preservation Commission. Lev Kimyagarov, a development site broker at Development Site Advisors, is currently marketing a property within the historic district at 257-259 Canal Street. It’s currently a two-story commercial building that could be redeveloped into residential under the rezoning.

“We have a ton of interest from developers,” Kimyagarov said in an interview. However, “most developers don’t want to go through the LPC process without knowing if they’re going to get [approval] or not.”

The larger rezoning initiative was a heavy political lift amid significant opposition from longtime residents of the area. It likely would not have passed after former Council Member Margaret Chin, who represented Soho, left office, since her successor Chris Marte was a vocal opponent of the plan.

People involved in the rezoning predict it will bear fruit over the long term and cited obstacles that have slowed development in recent years, like high interest rates and rising construction costs.

“Three years is typically not a lot of time when it comes to an area-wide rezoning,” said Council Member Carlina Rivera, whose district includes the Noho portion of the rezoning area.

For the past year or so, developers across the city had also been waiting to see the final shape of the mayor’s ‘City of Yes’ housing blueprint, which passed the City Council in December. That plan could make it easier to develop certain sites in the neighborhood, Rivera said.

“We’re hearing anecdotally from developers that they are interested in this area,” she said.

Much of what will determine new rental development in Soho and beyond is how builders respond to 485x, the new multi-family real estate tax break.

The program, which went into effect last April, came with expanded construction wage and affordable housing requirements. Developers building projects with at least 150 units in certain higher-rent parts of the city — including Manhattan below 96th Street and parts of the Brooklyn and Queens waterfront — must pay construction workers a minimum of $72.45 per hour or 65 percent of the prevailing wage, whichever is lower. Projects at that unit-threshold in other areas, including parts of Astoria and brownstone Brooklyn, must pay workers the lesser of $63 per hour or 60 percent of the prevailing wage.

Major developers including Douglas Durst and Two Trees’ Jed Walentas, chair of REBNY, paused projects earlier this year after concluding the finances wouldn’t pencil out under the new incentive. The market rents that their projects in Astoria and Williamsburg, respectively, could command wouldn’t be high enough to sustain the new requirements, they said.

Soho is among the priciest neighborhoods in the city, with the median asking rent for an apartment at nearly $8,000 as of December 2024, according to StreetEasy. Those high rents could potentially support higher construction wages and lower-rent affordable apartments in a way projects in other areas cannot.

“If [the tax break] doesn’t work in Soho, it doesn’t work,” said Ben Carlos Thypin, CEO of real estate brokerage Quantierra. “I’m not sure it’s a test run in that rents are so high there, I imagine lots of developers will say, of course MIH or 485x works here. But most places are not Soho.”

But even people who are optimistic about development conditions note the structural challenges remain.

“If a vacant lot showed up on the market in Soho, Tribeca — lower Manhattan markets limit that — the interest would be very, very strong,” said Mike Tortorici, a founding partner at the commercial brokerage Ariel Property Advisors. “The reality is those opportunities are relatively few and far between even with the rezoning that was passed a few years ago.”