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NYC Apartment Vacancies Fall to Lowest Level Since 1968

The scope of the housing crisis in New York City came into bold relief last week as the city released data showing that only 1.4% of rental units were vacant and available in 2023, the lowest vacancy rate in 56 years.

The new data from NYC's Department of Housing Preservation and Development also underlined the affordability crisis: the vacancy rate for lower-cost apartments was only a fraction of the overall 1.4% rate.

The vacancy rate for apartments priced less than $2,400 per month was below 1% in the city's latest tally, which is known as the Housing and Vacancy Survey. Apartment rents in Manhattan have been averaging median rents of more than $4,000 per month.

The overall vacancy rate translates to 33,000 units, the lowest number of available apartments in NYC since 1968, a year before rent stabilization was introduced limiting rents on more than 1M units. The survey also found that more than 41K housing units in NYC are not available for rent because they are undergoing or awaiting renovation.

The last time the survey was conducted, in 2021, the vacancy rate for apartments was 4.5%. NYC officials say any vacancy rate that is less than 5% constitutes a housing emergency; a rate between 5% and 8% is considered "healthy," the report said.

Mayor Eric Adams, who has made a "Moonshot" program to build 500,000 new housing units a centerpiece of his administration, conceded in a statement that demand for housing in NYC is by far outracing the city's ability to build new units.

"The data is clear: The demand to live in our city is far outpacing our ability to build housing. New Yorkers need our help, and they need it now," Adams said.

A perfect storm of conditions has maximized the housing crisis, including a dearth of new construction in a market stymied by rising costs and retreating lenders.

The dearth of affordable housing has fueled a migration of middle- and working-class people out of the city. At the same time, the migration of thousands of asylum-seekers into NYC has overwhelmed the city's shelter system, forcing the city to spend millions of dollars on hotel rooms and other temporary solutions.

The situation is compounded by the failure of the state government to take action to address the crisis. Gov. Kathy Hochul's ambitious agenda to build 800,000 new housing units went down in flames in the state legislature last year after suburban legislators rejected Hochul's plan to override local zoning laws and increase density in suburban districts.

Hochul issued a statement last week calling the new survey "the latest reminder that we can only build our way out of this."

Hochul used her annual State of the State last month to make restoring the 421a tax break for affordable housing a top priority of her 2024 agenda.

Hochul said any restoration of the tax abatement, which expired in June 2022, will need to include new requirements for below-market housing and wage standards for building service and construction workers. She suggested that the legislature enable NYC to offer its own abatement for rental housing construction.

Hochul also renewed her support for a four-year extension of the deadline that requires 421a projects to be completed by June 2026 in order to be eligible for the tax breaks, which offered a decades-long abatement on property taxes in exchange for setting aside a percentage of housing for lower- or middle-income tenants.

Developers in NYC rushed to put in building foundations for numerous projects in June 2022 before 421a expired. The slowdown in new construction last year as high interest rates made it hard to secure construction financing put many of these projects in jeopardy of missing the 2026 deadline.

More than 32,000 new housing units may not get built if the 2026 deadline is not extended, according to the Real Estate Board of New York (REBNY).

In her speech, Hochul also pledged to deliver housing law changes that NYC officials have said are essential to the city's "Moonshot" plan to build more than 500K new housing units in the next 10 years, including the conversion of unused office space to residential use.

The governor said she would seek to lift a floor-area ratio cap that would allow developers to build more densely. Hochul also said she would pursue legislation to provide tax credits to commercial property owners for building conversions to housing as well as a law that would legalize basement apartments.
Reprinted with permission from the Mon, 12 Feb 2024 07:01:12 EST online edition of GlobeSt © 2024 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-256-2472 or reprints@alm.com.