Table of Contents
Find NYC Development Sites
Skyline Properties sources off-market development sites and air rights opportunities across NYC.
1. Site Selection & Land Acquisition
Successful development begins with the right site. In NYC, where land is scarce and competition fierce, identifying developable parcels requires deep market knowledge, strong broker relationships, and the ability to move quickly. Development sites come in several forms -- vacant lots, underbuilt properties with excess air rights, demolition candidates, and assemblages of multiple adjacent parcels.
The price of land in NYC varies enormously by borough, neighborhood, and zoning. Prime Manhattan residential development sites can trade at $500-$1,000+ per buildable square foot, while outer borough locations may range from $50-$200 per buildable square foot. The key metric is price per buildable square foot (lot price divided by maximum buildable area under zoning), which allows comparison across sites with different zoning densities.
Site Selection Criteria
- Zoning designation and maximum buildable floor area (FAR) determine project scale
- Transit access -- proximity to subway stations drives residential demand and value
- Lot dimensions and geometry -- irregular lots create design challenges and inefficiencies
- Environmental conditions -- Phase I/II assessments for contamination, flood zone status
- Existing structures -- demolition costs, tenant relocation, and asbestos abatement
- Neighborhood trajectory -- rezoning activity, infrastructure investment, and market momentum
2. Zoning Analysis & Feasibility
Zoning determines what you can build, how large it can be, and how it must be configured. NYC's Zoning Resolution is one of the most complex regulatory frameworks in the country, governing use (residential, commercial, manufacturing), bulk (floor area ratio, height, setbacks), and density (dwelling units per lot area) for every parcel in the city.
Floor Area Ratio (FAR)
FAR is the ratio of total buildable floor area to lot area. A 10,000 SF lot zoned at 6.0 FAR allows 60,000 SF of construction. Different uses (residential, commercial, community facility) may have different permitted FARs within the same zoning district. Bonus FAR may be available through inclusionary housing or public plaza provisions.
Height & Setback Regulations
NYC regulates building height through sky exposure planes, tower regulations, and contextual height limits. Contextual zoning districts (denoted by letters like A, B, D, X) impose strict maximum heights and street wall requirements. Non-contextual districts use sky exposure planes that allow taller buildings with setbacks from the street.
Inclusionary Housing Bonus
In designated areas, developers can earn additional FAR by including permanently affordable housing units. Mandatory Inclusionary Housing (MIH) zones, created through recent rezonings, require affordable units as a condition of development. The affordability level and percentage varies by option selected (e.g., 25% at 60% AMI or 30% at 80% AMI).
Air Rights & Assemblage
Unused development rights (air rights) from adjacent lots can be transferred through zoning lot mergers to increase a project's buildable area. In landmark districts, Transferable Development Rights (TDRs) can move across wider areas. Strategic air rights assemblage can dramatically increase project scale and economic viability.
A thorough zoning analysis should be conducted by an experienced NYC zoning attorney or land use consultant before any site acquisition. The analysis must confirm permitted uses, maximum buildable envelope, required parking, open space ratios, and any special district overlays or landmark restrictions that may apply.
3. Predevelopment & Approvals
The predevelopment phase encompasses everything between site acquisition and the start of construction -- design, engineering, environmental review, community engagement, and DOB permit approvals. This phase typically takes 12-24 months and represents a critical investment of time and capital before any physical work begins.
NYC-Specific Approval Processes
DOB New Building (NB) Permit
All new construction requires an NB application filed through DOB NOW. The filing includes architectural plans, structural engineering, mechanical/electrical/plumbing (MEP) drawings, and supporting calculations. DOB plan examiners review for zoning compliance, building code conformance, and fire safety. Professional certification by a registered architect or engineer can expedite approval but shifts liability to the certifying professional.
Environmental Review (CEQR)
Projects requiring discretionary land use actions (rezonings, special permits, variances) trigger the City Environmental Quality Review (CEQR) process. CEQR analyzes potential impacts on traffic, air quality, noise, shadows, open space, historic resources, and other environmental factors. An Environmental Assessment Statement (EAS) is required, and significant impacts may necessitate a full Environmental Impact Statement (EIS), which can add 12-18 months to the timeline.
Community Board Review
Projects requiring ULURP (Uniform Land Use Review Procedure) actions are reviewed by the local Community Board, which provides a non-binding advisory recommendation. While advisory, community board opposition can influence the City Planning Commission and City Council decisions. Proactive community engagement and responsive project design are essential for navigating this process.
Landmarks Preservation Commission (LPC)
Projects within designated historic districts or involving individual landmarks require LPC review and approval. The Commission evaluates design compatibility with the historic context, which can require significant architectural modifications. LPC review adds time and cost but does not preclude development -- it shapes the design within the historic framework.
4. Development Financing
Financing ground-up development is fundamentally different from acquisition financing. Lenders are underwriting a project that does not yet exist, creating a higher-risk proposition that requires more equity, higher interest rates, and extensive documentation. The typical NYC development capital stack combines equity, mezzanine debt, and a senior construction loan.
Senior Construction Loan (50-65% of total cost)
The primary debt facility, provided by banks or institutional lenders. Construction loans are interest-only, floating rate, and drawn incrementally as construction progresses (funded through a draw schedule). Lenders require personal guarantees, completion guarantees, and a funded interest reserve. Terms typically include 24-36 month initial terms with extension options.
Mezzanine Debt (10-20% of total cost)
Subordinate debt that sits between the senior loan and equity. Mezzanine lenders charge higher interest rates (10-15%+) to compensate for their junior position in the capital stack. Mezzanine debt reduces the equity requirement but increases overall project risk and the break-even threshold. Intercreditor agreements govern the relationship between senior and mezzanine lenders.
Developer Equity (25-40% of total cost)
The developer's "skin in the game" -- contributed as cash equity, land value, or a combination. Equity is first-loss capital, meaning the developer absorbs losses before any lender. For larger projects, equity is often raised through syndication or joint ventures with institutional partners. The equity requirement is typically the binding constraint on project feasibility.
EB-5 & Public Incentive Financing
Some NYC developments incorporate EB-5 immigrant investor capital, which provides a lower-cost alternative to traditional mezzanine debt. Public financing tools including HPD term sheets, HDC bond financing, and IDA benefits are available for projects meeting affordable housing and job creation thresholds. These programs can significantly improve project economics.
5. Construction & Project Management
NYC construction is among the most expensive and logistically challenging in the world. Constrained sites, union labor requirements, stringent safety regulations, limited staging areas, and coordination with adjacent properties all add complexity and cost compared to markets with more available land and less regulatory oversight.
NYC Construction Cost Breakdown
- Hard Costs ($300-$700+ PSF): Direct construction costs including foundations, structure, mechanical systems, facades, interiors, and finishes. Concrete frame construction for mid-rise buildings typically runs $350-$500 PSF, while steel-frame high-rises and luxury finishes can exceed $600+ PSF.
- Soft Costs (20-30% of hard costs): Architecture, engineering, permits, legal, insurance, marketing, project management, and carrying costs during construction. Soft costs in NYC are elevated due to the complexity of approvals, specialized consultants required, and extended project timelines.
- Land Cost (30-50% of total budget): In many NYC locations, the land cost equals or exceeds total construction costs. Manhattan development sites can trade at $400-$1,000+ per buildable square foot. Land cost is typically funded by the developer's equity and is contributed to the project before the construction loan is drawn.
- Contingency (5-10% of hard costs): An essential budget line to cover unforeseen conditions, change orders, material price escalation, and weather delays. Experienced NYC developers maintain robust contingencies given the city's construction unpredictability. Lenders typically require a minimum 5% contingency.
Selecting the right general contractor (GC) is critical. Experienced NYC GCs understand DOB inspection protocols, union work rules, adjacent property protection requirements, and the logistical challenges of urban construction. GMP (Guaranteed Maximum Price) contracts are preferred by most developers as they cap hard costs and shift overrun risk to the contractor, though they typically include a GC fee of 3-5% plus a shared savings provision.
6. Tax Abatements: 421-a & 485-x
Property tax abatements are one of the most significant incentive programs available to NYC developers. Given that property taxes are one of the largest operating expenses for multifamily buildings -- often exceeding $3,000-$5,000 per unit annually -- a multi-decade abatement can fundamentally alter project economics and make otherwise infeasible projects viable.
421-a Program (Expired)
The 421-a program provided 25-35 year property tax exemptions for new multifamily construction that included affordable housing. The program expired in June 2022 after the state legislature failed to renew it. Projects that vested under 421-a before expiration continue to receive benefits for the duration of their abatement period. The program was criticized for providing excessive tax breaks while not producing enough affordable units.
485-x Program (ANNY)
The Affordable Neighborhoods for New Yorkers (ANNY) program, enacted in 2024 as 485-x, replaces 421-a with enhanced affordability and labor requirements. The program provides a 35-year tax exemption for qualifying new rental construction. Key requirements include a percentage of affordable units at specified AMI levels, prevailing wage for construction workers, and restrictions on condo conversion. The program is designed to produce more affordable housing while ensuring fair compensation for construction labor.
485-x Key Requirements
- Affordable housing: percentage of units at 40-80% AMI depending on geographic area
- Prevailing wage requirement for building service workers and construction workers
- 35-year benefit period with phase-out in final years
- Prohibition on converting to condominium or cooperative ownership
- Unit size and quality requirements to ensure livable affordable housing
- Compliance monitoring and penalties for non-compliance during the benefit period
7. Lease-Up, Sales & Stabilization
The final phase of ground-up development is bringing the completed building to market. Whether the exit strategy is rental stabilization, condo sales, or a combination, this phase determines whether the project meets its financial targets. Effective marketing, pricing strategy, and operational readiness are critical to maximizing returns.
Rental Lease-Up
For rental projects, lease-up typically takes 6-18 months to reach stabilized occupancy (95%+). Initial lease-up often includes concessions (1-3 months free rent) to attract early tenants. Marketing costs include brokerage commissions (12-15% of annual rent for each new lease), digital advertising, model unit staging, and leasing agent salaries. The Temporary Certificate of Occupancy (TCO) from DOB must be obtained before tenants can legally occupy.
Condominium Sales
Condo projects require filing an offering plan with the NY Attorney General's office. Sales may begin upon acceptance of the plan but closings typically cannot occur until the building receives a TCO. Pre-sales during construction help reduce risk and demonstrate market demand. Sales velocity and achieved pricing are the primary metrics for condo development success.
Stabilization & Permanent Financing
Once a rental project reaches stabilized occupancy, the developer typically refinances the construction loan into permanent long-term debt at lower interest rates. The permanent loan is sized based on stabilized NOI and prevailing cap rates. Excess proceeds from refinancing may allow partial return of equity to investors while maintaining ownership of the asset.
Disposition (Sale of Completed Building)
Some developers sell the completed, stabilized building to a long-term holder. Newly constructed, stabilized buildings command premium pricing from institutional buyers due to their modern systems, low near-term capital expenditure needs, and full remaining useful life. Sale timing depends on market conditions and the developer's return targets.
8. Frequently Asked Questions
How long does it take to develop a building in NYC?
A typical ground-up development takes 3 to 5 years from site acquisition to completion. Predevelopment (zoning, design, permits, environmental review) takes 12-24 months. Construction takes 18-36 months depending on building size and complexity. Including lease-up or condo sales, the full cycle can extend to 5-7 years for larger or more complex projects. Projects requiring rezonings or ULURP actions can add 12-24 months to the predevelopment timeline.
What is the 485-x tax abatement in NYC?
The 485-x program (Affordable Neighborhoods for New Yorkers, or ANNY) replaced the expired 421-a tax abatement in 2024. It provides a 35-year property tax exemption for new multifamily rental construction that includes affordable housing units and meets prevailing wage requirements. The program is designed to incentivize new housing production while ensuring affordability and fair labor standards. Compliance is monitored throughout the benefit period.
How much does it cost to build in NYC?
Hard construction costs range from $300-$500 PSF for standard residential to $400-$700+ PSF for luxury or complex buildings. Total all-in development costs (land + hard costs + soft costs + financing) range from $500-$1,200+ PSF. NYC is consistently ranked among the most expensive construction markets globally due to union labor requirements, regulatory complexity, logistical constraints, and material transportation challenges.
What is the DOB permit process in NYC?
The DOB New Building (NB) permit process requires filing architectural and engineering plans through DOB NOW for review. Plans are examined for zoning compliance, building code conformance, fire safety, and structural adequacy. Approval timelines range from 3-12 months. Professional certification by a registered architect or PE can expedite approval. After approval, the developer must obtain work permits, schedule DOB inspections throughout construction, and obtain a Certificate of Occupancy upon completion.