"Usually, developers get more bang for the buck from smaller units. That is, 125 one-bedrooms averaging 600 square feet fetch more total rent than 100 one-bedrooms averaging 750 square feet. But this isn't true if it means triggering the 485x wage scales for construction workers that kick in when the unit count hits 100 and 150."
"Minskoff is splitting the project into two buildings to avoid the 150-unit threshold for any one building. If Minskoff is only building 198 units, it would make sense to do two 99-unit buildings—especially if the Landmarks Preservation Commission demands changes to the initial design (which is likely)."
"The bottom line is that 485x is producing fewer and more expensive units than its pre[decessor policies], contradicting the city's affordability housing policy priority."
New York City's future apartments will be larger and more expensive due to state policy rather than developer preference. The multifamily tax break 485x creates perverse incentives by imposing higher construction wage scales when projects reach 100 and 150 units. Developers respond by building fewer units with larger square footage to maximize rental income while avoiding wage-scale triggers. The 375 Lafayette Street project exemplifies this: despite increased floor-area ratio allowances, the unit count remained around 200-210 instead of increasing. Developers split projects into separate buildings to stay below the 150-unit threshold. This policy outcome contradicts housing affordability goals, as smaller units typically generate more total rent but become economically disadvantageous under 485x wage requirements.
Read at therealdeal.com
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