New York’s City of Yes Has Carve-Outs That Deny Developers Density

When Mayor Eric Adams promised to modernize New York City zoning laws dating to the early 1960s, his goal was to spur more multifamily housing development in every neighborhood to ease the worst housing shortage the city has ever experienced.

The “City of Yes” plan — introduced in June 2022 and passed in December 2024 — has been hailed as a triumph of municipal lawmaking, altering zoning requirements on density, property use and parking that often stymied housing construction. The plan was supposed to clear a path for as many as 109,000 new units in neighborhoods across the city by 2039.

Carve-outs courtesy of the City Council, though, could seriously curb where these units go. Real estate developers are nevertheless excited.  

Here’s what happened. As the legislation wound its way to passage, City Council members in the outer boroughs added exemptions. They carved out several blocks of single-family enclaves within their districts to shield them from zoning changes that would allow for denser apartment complexes — in some cases, enclaves a mere minute’s walk from the subway or a Long Island Rail Road station. These enclaves included Hollis, Laurelton and St. Albans in Queens.  

Other members added special exemptions to large swaths of Wakefield and Eastchester in the North Bronx as well as Corona and Far Rockaway in Queens that would maintain the requirements to build new parking spaces that come with any new development site, even though subway and bus lines are nearby. Some council members even blocked a change that would have allowed the construction of more housing units above retail “town centers,” keeping commercial strips with buildings that are predominantly single-story shopping centers.

A City Council spokesperson said the goal was to pass a proposal to create the most number of homes in each district while ensuring that a majority of members supported the project by “respecting differences between zoning districts and neighborhoods.” 

“There is no glory or benefit to the city in a failed proposal that lacks the support to be approved and create new homes for New Yorkers,” council spokeswoman Mara Davis said. 

By the time the council finally approved City of Yes, its modifications had shrunk the number of estimated new homes to 82,000. That’s well below the mayor’s initial projections, and it sets a pace of only 6,000 new homes per year. Meanwhile, New York could need as many as 473,000 new homes ito keep up with the city’s expected population growth, according to estimates from the Regional Plan Association. 

The council’s alterations have not stopped City Planning Commissioner Dan Garodnick from celebrating the passage of new zoning rules that were years in the making.

“We’re already seeing results, from affordable developments able to add more homes to office buildings that are newly able to convert to housing, and we’re confident that these changes will deliver the housing we need in the years to come,” Garodnick said in a statement to Commercial Observer.

Many developers are cheering the measure too, thankful for new tools that will allow them to build a denser concentration of homes in neighborhoods such as Midtown South and Astoria, Queens. 

“We’re thrilled about this. We think it was a huge win for the city,” said Ofer Cohen, founder of commercial real estate brokerage TerraCRG and principal at developer Ailanthus. “Are there some districts that would have been better not to have the parking requirement? Maybe, but I don’t think the carve-outs and compromises diminish the tremendous value that the plan as a whole provides.”

To some, however, the carve-outs represent a missed opportunity to add more housing at prices well below the market’s peak to areas that have not seen new development in years.

“We have an incredibly onerous regulatory scheme, extremely high construction costs, and a shortage of land,” said Jordan Barowitz, principal at Barowitz Advisory, a consulting firm that has real estate clients. “It’s definitely progress, and those people who shepherded it through deserve significant recognition, but the difficulty of it is a testament to the unfortunate culture of people being against new housing.”

One area that will almost certainly benefit significantly from City of Yes is Midtown South.

The 42 blocks roughly between 41st and 23rd streets could see an influx of residential towers in the coming years thanks to two zoning districts that the resolution created, R11 and R12. That new zoning allows far more units on a site than has been previously permitted.

These bulky high-rises are possible thanks to the state legislature, which removed the floor area ratio (FAR) cap in last year’s state budget. Previously, state law limited floor space within residential buildings in New York City to 12 times the size of their lots. Now, developers will be able to plan for FARs of 15 and 18 times the lot size, creating larger properties with even more homes as a result, as long as they reserve one-quarter of those units to be rented at below-market prices.

“If you’re looking at the zoning, it’s hard to understate how significant it is,” Adam Taubman, a land use attorney at Kramer Levin, said. “The administration’s proposal for Midtown South is exciting because it’s the first instance in which the city is expected to map the higher-density residential districts that were created by City of Yes, so they should hopefully lead to a significant amount of new housing.”

Of course, there aren’t a lot of vacant lots in Midtown South just waiting for someone to erect a high-rise. 

Instead, the new zoning rules make it easier to transform underused offices, factories and dormitories into housing by moving the eligibility date of conversion to 1991 and making the conversion as-of-right instead of requiring a lengthy review process. The state legislature also handed out a new tax break for developers who want to convert these middle-age office buildings, as long as they reserve a portion as affordable units.

The rules have given owners more incentives to convert Class B and Class C office buildings into mixed-income homes. Other less heralded City of Yes revisions eliminated a requirement for off-site parking and removed a restriction that prevented developers from utilizing all of the space within a commercial property for new homes after they renovate it.

The changes have already encouraged developers to advance several conversions. Two Trees Management is moving to convert the Flatiron District’s Jewelcor Building, a Class B office at 50 West 23rd Street, by removing about 100,000 square feet in the middle of the property and using that space for additional market-rate apartments. The city’s Landmarks Preservation Commission approved the plans in December, and the project is expected to be completed in five to six years.

“We were tracking [City of Yes] and came up with this concept during the adoption of it,” said David Lombino, Two Trees’ managing director of external affairs. “Previously, developers could have used only 66 percent of the density they could scoop out from the middle of an office property, and now they could use all of it.”

New housing development won’t be concentrated only in Manhattan’s Midtown and Midtown South.

Developers are scouring sites in residential neighborhoods throughout the city where land values are comparatively low, where the new zoning maps will permit a denser concentration of residential units, and where the requirement to build parking spaces has been removed. Expect to see more multifamily in parts of northern Brooklyn, the South Bronx, Long Island City and Astoria, land use experts say.

“Those neighborhoods are very ripe for the change that the city and state together are trying to facilitate,” Taubman said. “They have this mix of ingredients involving some existing medium- and high-density development, proximity to the city’s central business district, and land costs and construction costs that might just work out from a numbers perspective.”

Aaron Koffman, CEO of Milestone Development, which specializes in affordable housing, believes that areas close to subway lines remain attractive for development, no matter how far from Manhattan. He’s looking in particular at areas between Coney Island and Prospect Park in Brooklyn as well as parts of Woodhaven in Queens where nearby properties may be only one or two stories tall.

“There’s a big swath of land between Prospect Park and Coney Island where you could have a 12-story building and you support more housing supply, because I don’t know where we’re going to get it otherwise,” he said. “It would be nice to see more density as you go down Coney Island Avenue and Ocean Parkway toward Coney Island, but if you move away from that street with higher density it’s all single-family homes.”

The new zoning rules have led some owners to revise proposals in the initial stages to accommodate even more units on their lots. 

Slate Property Group co-founder David Schwartz plans to add another 50 to 60 units with rents priced at 60 percent of area median income to an East Williamsburg-Bushwick site his company is developing, thanks to the City of Yes changes. (Slate couldn’t provide the exact address.) He hopes to break ground later this year.

“We’ll be able to add hundreds of real affordable units that we have, and it will help some projects work. We were looking at projects that wouldn’t have worked otherwise,” Schwartz said. “We’re not going to see delivery of City of Yes in 2025, but we’ll see the impacts in a couple of years from now.”

Don’t count out the areas whose elected leaders carved out parking and density exemptions, either. Developers are still looking at projects in Jamaica and Far Rockaway, Queens, where they can still build apartment properties that pencil out, and the existing parking requirements may not dissuade them. The city is preparing to rezone 300 blocks in Downtown Jamaica this spring, which could lead to an additional 12,000 units.

Queens Borough President Donovan Richards heard plenty of community opposition to new development when he reviewed City of Yes before ultimately supporting it. He believes some concerns are overblown.

“In the neighborhoods that have the loudest voices, I have to remind people that Bay Terrace [a shopping complex in northeastern Queens] has not ruined your neighborhood,” he said. “The most astounding thing is that you see examples of this kind of development already. What I should have done when I put my recommendation out is say, ‘This is in your neighborhood already.’”