How to Build 700,000 Homes in NYC in Five Hard Steps

(Bloomberg) -- When Seema Reddy, 51, moved to the Upper West Side 24 years ago, the fresh-out-of-college art history graduate did what many broke 20-somethings do: She joined a roommate in a railroad apartment best described as a “hovel.”

“I could afford it, but it was awful,” she said, recalling the apartment was burgled while she lived there. Still, she liked the neighborhood and the location was convenient to her first job at Sotheby's Auction House. 

In 2002, the median Manhattan rent for a one-bedroom hovered around $2,500, though Reddy paid $1,800 for her portion. Last month, Manhattan’s median rent hit a record $5,000. Across New York City, the rental vacancy rate is just 1.4%, according to the city’s new Fair Housing Growth Strategy report. Five percent is the target vacancy rate, which the city has never reached, according to the report.

Reddy is now married and raising her child on the Upper West Side, in a three-bed townhouse, where the average rent is over $7,500 for a unit that size. Since buying with her husband in 2014, Reddy thinks the UWS is the best neighborhood in the city with easy access to Central Park, museums and arts institutions like Lincoln Center, where she later worked. But she questions whether a recent college graduate can move there today.

The Housing Preservation Department studied what it would take to make housing more affordable, and in a report released Oct. 9 estimated the city needs 700,000 additional homes over the next decade to alleviate its shortage. The proposal, required under a 2023 law, complements Mayor Zohran Mamdani’s $22 billion plan to build or preserve 200,000 affordable homes within a decade.

It also poses an early test of whether Mamdani can deliver on his central campaign promise: make New York more affordable. On Nov. 3, NYC voters passed all of Mamdani’s five ballot proposals intended to fast-track housing, along with expanding outdoor dining and bike lanes, the Associated Press reported. Two of the measures will expedite review for projects on city-owned land and streamline the permitting process. To work, however, the housing plan still has several obstacles to clear, from outdated regulation and classic NIMBY-ism to perhaps the biggest: encouraging capital to enter its dicey market.

Step 1: Make Growth Proportionate

NYC employment hit a record high this year, yet housing production increasingly lags behind job and population growth. That’s squeezing tenants and pushing higher-income apartment-hunters into lower-cost neighborhoods, displacing longtime residents. A wealthier customer base can reshape everything in a neighborhood from rent to the cost of a morning bagel to late-night takeout.

“If you’re looking for an apartment right now, you are radicalized by how few options there are out there and how expensive everything is,” said Annemarie Gray, executive director of the pro-housing group Open New York. “New York City really risks losing its identity as a place that is open and accepting and provides opportunities for people if we don’t turn that around.”

The city’s strategy articulated in its report is to evenly spread housing growth by setting targets for community districts that are partly based on historical housing production and affordability. That means asking some of New York’s lowest-growth neighborhoods to build substantially more. 

On the UWS, the report calls for more than 10,700 additional homes over the long term — one of the highest marks in the report — including nearly 3,900 affordable, deeply affordable or supportive units. New units built or preserved since Jan. 1 count toward the total when they receive a certificate of occupancy, while demolished or consolidated units can reduce a district’s total. 

Housing Preservation and Development Deputy Commissioner Michael Sandler said the nonbinding strategy is a “shared framework” whose targets will require rezonings, infrastructure investments and other policy changes.

“This is the first step, not the last step,” he said.

The disparity among neighborhoods is stark. From 2010 through 2025, Manhattan’s Chelsea, Hell’s Kitchen and Hudson Yards district added nearly 21,000 units, compared with about 5,800 on the UWS and 1,900 on the Upper East Side, according to a Department of Buildings report. The figures are net units, subtracting demolitions and consolidations from new and renovated buildings.

The shortage is decades in the making. From 2003-2007, drastic rezoning boosted density in previously industrial areas like Williamsburg and Long Island City, while other changes limited growth in established neighborhoods like the UES and UWS to preserve character. 

Meanwhile, Manhattan has lost over 100,000 units over the last 70 years as townhouses are combined into mega-mansions and smaller apartments are consolidated into larger homes. Reddy, who leads the local Community Board 7’s land-use committee, worries this is bringing in  more ultra-wealthy residents who are less rooted in the local economy and community. 

Step 2: Make Room

Sheldon Fine has watched the Upper West Side transform since 1971 from the same West 103rd Street building. When he moved there for his wife, his friends questioned why he would move to such a dangerous block. Fine, a “Bronx boy,” laughed it off. Now, historic demand has made it so there are no bad neighborhoods in New York, according to one developer.

When he moved in, Fine’s two-bedroom cost $215 a month — roughly $1,774 today. More than five decades later, he’s paying $2,225 for the same rent-stabilized apartment.

Fine has spent 41 years on Community Board 7 and runs the West Side Federation for Senior and Supportive Housing, which houses older and vulnerable New Yorkers. Walking the neighborhood with him means regularly stopping to greet someone he knows. 

“We’ve had multiple people come to us and say, ‘I grew up here, but I can’t afford to come back,’” Fine said.

He advocates for more affordable housing, but he doubts the UWS has room for almost 11,000 additional homes. That question came to a head when HPD presented the strategy to a Community Board 7 meeting on Sept. 14. 

Board members pointed to scarce vacant land, landmark districts and high development costs. One member, Minna Elias, said the lofty, public goal sets the UWS up for failure.

While the question of how the city could set housing targets before determining where the units could go drew the most public feedback according to HPD, the department said those decisions are outside the scope of the report. 

“We were not looking at this stage at where there are buildable sites,” said Sarit Platkin, HPD’s executive director of neighborhood planning and equity initiatives. Site-level feasibility would come later, she said.

Not everyone on the board considered the target itself unrealistic. Banker Tibita Kaneene noted District 7 has grown by only about 0.28% annually and said the report’s target of roughly 1.5% yearly growth could be achieved through modest rezonings and policies the board has already endorsed.

“I don’t think that’s ridiculous,” Kaneene said. “I think it’s completely feasible.”

Community Board 7 members also asked what incentives would be available to encourage developers to build in one of the country’s most expensive real estate markets. HPD deferred questions about implementation.

Step 3: Make the Numbers Work

Even if the city creates more places to build, the housing still needs to meet developers’ profitability requirements.

Brooklyn’s Gowanus neighborhood offers a test case. Its 2021 rezoning unlocked thousands of units on formerly industrial land. Charney Companies is working with Tavros Capital Partners to build 1,100 apartments at 175 Third Street, including almost 300 affordable units.

The project was approved under the city’s now-expired rental property-tax incentive. Rosie Tilley, Charney’s head of development, said the same project wouldn’t happen under today’s laws because new affordability and labor requirements add costs that anticipated rents can’t support.

Tax abatements and faster, predictable regulatory approvals are critical to encourage new projects, especially at a time of high borrowing and construction costs, said TJ Edwards, chief production officer of real estate finance at Walker & Dunlop. Lenders must ensure future income can cover debt refinancing if operating costs outpace restricted rents.

“We can’t regulate ourselves to a solution,” Edwards said. “You need equity, debt and policymakers all on the same page working in accord with one another.”

New York may be nearing the limits of property-tax exemptions and traditional affordable-housing subsidies, said Moses Gates, vice president at the Regional Plan Association. With recent zoning reforms already expanding building capacity, policymakers should lower construction costs for developers by addressing outdated building regulations, he said. 

Meanwhile, HPD is looking to streamline permitting, interagency coordination and the affordable-housing lottery through its SPEED initiative, which the city says could shorten some publicly sponsored projects by as much as two years.

Gates said these changes need time to work, but reaching 700,000 homes will require getting nearly every piece right at once. 

“It’s like you’re running this race and there’s these six to eight hurdles,” he said. “You have to be able to clear all of them consistently.” And even then, “You need to hit a couple of lucky breaks.”

Step 4: Win Over Neighborhoods

Community Board 7 has proposed its own ways to accommodate more housing through “The Manhattan Plan,” including building above city-owned sites like schools, libraries, police precincts and firehouses, increasing density on major streets, expanding Mandatory Inclusionary Housing and reviving Single Room Occupancy units — dormitory-style housing with shared kitchens and bathrooms largely barred in the city.

One of the neighborhood’s last vacant parcels of land, the former ABC campus on 80 West 67th Street, is being redeveloped by Extell Development into what will be the tallest tower on the UWS. The project requires no rezoning, special permits or Community Board 7 approval, and therefore no affordable housing.

Reddy said this project is an example of the importance of community involvement. Extell founder Gary Barnett worked with Community Board 7 to include affordable units to maintain goodwill, even though they weren’t required. Still, board members said they would have liked the city’s help to push for more.

A 171-unit project on West 96th Street also benefitted from local engagement. Fetner Properties CEO Hal Fetner voluntarily engaged neighbors on designs, noise and construction schedules.

“We don’t like to fight,” Fetner said. “Any project I’ve ever done, I’ve actually worked — whether I was obligated to or not — I worked with the community.”

Completed in 2024, it was among the first substantial new rental projects in the neighborhood in more than a decade. While the 96th Street site was previously vacant due to environmental contamination concerns, Fetner said political resistance has prevented housing elsewhere.

“There’s a reason why no one’s built there right now,” Fetner said of some low-growth neighborhoods. “You’ve got city council members saying: ‘I don’t want you here.’”

Step 5: Make Building Easier

Vishaan Chakrabarti, founder of Practice for Architecture and Urbanism, said numerical targets alone are “never gonna win over the hearts and minds of New Yorkers.”

Chakrabarti said it’s possible to add almost 11,000 new homes to the UWS without sacrificing its historic character, but he said officials should emphasize the positives housing can provide for neighborhoods. At its meeting, Community Board 7 members voiced concerns about already crowded schools and public transit, as well as sewer capacity.

The city also has to make it easier to build smaller, mid-rise projects, Chakrabarti said, rather than relying on skinny supertall high-rises.

“We’ve gotta talk about both quality and quantity,” Chakrabarti said. “Having a conversation just about quantity is a losing battle.”

The city’s complicated regulatory system disproportionately benefits large developers with lawyers, lobbyists and consultants capable of navigating it, he said. To succeed, New York has to make it simpler for smaller builders to take on projects. 

For Charney Companies’ Tilley, reaching the targets ultimately comes down to whether the city creates the conditions necessary for those homes to be built.

“I love their focus on locating and investing in affordable housing in certain locations which have not realized it,” Tilley said. “But it’s a shame that all of that could come to naught if there’s not the structure to make that happen.”

--With assistance from Peter Champelli.

(Updates with detail on Tavros partnering with Charney on a development in 28th paragraph.)