Affordable housing — perhaps the hottest topic within New York commercial real estate — has seen favorable fundamentals of late and a flurry of recent sales. But many are asking: Will the momentum continue?
First, the good news.
SEE ALSO: Seven-Story Residential Project Coming to Brooklyn’s Homecrest
Portfolio sales in New York City so far in 2025 include Tredway acquiring an affordable housing complex in Far Rockaway, Queens, for $88 million from Related Companies. Longacre Group, a joint venture between PH Realty Capital and Rockledge, acquired a 34-asset rent-stabilized portfolio in the Bronx for $192.5 million. MBD Community Housing Corporation acquired five multifamily buildings in the Fordham neighborhood of the Bronx from nonprofit Neighborhood Restore for $32.3 million. In a deal this July, Fetner Properties, MCB Real Estate and Farallon Capital Management spent $209.5 million acquiring a 30-story building with dozens of affordable units at Brooklyn’s 240 Willoughby Street.
Such sales are occurring in spite of the fact that affordable housing is known for low financial returns. Yet investors have become attracted to the asset’s relatively low risk, value-creation possibilities and tax break opportunities thanks to city and state legislation, much of it enacted in the last three years. The business community’s jones for showcasing its environmental, social and corporate governance (ESG) bona fides, though not as strong as it was, has also been a contributing factor.
“We’ve definitely seen an increase in new players entering the affordable housing space, especially on the [limited partners] capital side,” said Matt Linde, principal and CEO of Property Resources Corporation, a multifamily real estate firm active in the buying and selling of affordable housing. “As times change, people are really looking at the environmental and social impact of their investments more than they ever have. … Within financial institution circles, it’s drawn more eyeballs to the affordable housing space.
“For the most part, what makes affordable housing sought after is the combination of strong, government credit-backed returns and societal benefits that have a positive impact on communities,” Linde said. “When it works perfectly, the public programs create a strong enough incentive for the development community to commit to providing housing at rents that are below market rate.”
In 2023, the sales total of New York City affordable housing portfolio deals reached $7.4 billion, according to data from investment sales brokerage Ariel Property Advisors. Of that dollar volume, 35 percent was affordable, 18 percent was rent stabilized, and 48 percent was market rate.
Those figures tapered off in 2024: Of the $8.9 billion total multifamily sales that year, just 8 percent of the dollar volume was affordable. Similar figures are being seen so far in 2025: Of the $3.79 billion in total multifamily sales so far this year, just 8 percent has been affordable.
Nevertheless, Shimon Shkury, president and founder of Ariel Property Advisors, said the demand is still there, even if the supply has thinned — which is where the change needs to happen. Currently, the firm is sitting on $400 million in affordable housing inventory, and buyers are circling. Moreover, Ariel has already done $250 million in development site activity so far this year (including sales, listings and sites in contract).
Recent public legislation at both the city and the state levels has resulted in programs designed to incentivize the building of affordable housing across New York.
New York State’s 485x tax abatement — which replaced the expired state 421a tax abatement — offers developers property tax exemptions if certain housing, wage and construction criteria are met, including setting aside shares of units as affordable. There is also the state 467m program, which offers tax exemptions for converting buildings from nonresidential uses — i.e. office buildings — to housing.
The city also underwent a massive rezoning effort called City of Yes, which changed certain zoning regulations and allowed housing to be built in areas where it previously wasn’t possible or feasible. The Gowanus neighborhood of Brooklyn underwent a separate rezoning effort, and now there are thousands of new affordable housing units expected to be built.
These regulations, coupled with recent portfolio sales activity, could indicate that there is an affordable housing boom coming to New York. However, the current geopolitical climate coupled with the possible election of Zohran Mamdani as the city’s next mayor has some in the commercial real estate industry concerned that the momentum could slow, especially since Mamdani’s proposed policies would lean more heavily on public rather than private efforts.
Some of Mamdani’s proposals include a rent freeze on the city’s rent-stabilized apartments, a tax on individuals earning over $1 million per year, and a plan to build 200,000 affordable homes over the next decade through greater influence from the public sector rather than the private. Many in the CRE industry say such policies will hurt housing in the city over the long term.
But Mamdani isn’t looking to cut out the private sector completely. He said he wants for-profit developers to keep building homes in the city and has proposed more streamlined project proposal reviews, The Real Deal noted — especially in areas of the city that have lacked housing development. He also wants to see more development in “well-to-do” neighborhoods.
Many in the commercial real estate industry are skeptical that Mamdani’s proposals can succeed.
“I’m encouraged that he is speaking about a major role for the private sector as a resource to help solve the affordable housing crisis,” said Will Blodgett, founder and CEO of Tredway. “But I do not believe that we can solve the affordable housing crisis using the government alone. It will take true public-private partnerships — but it’s going to take New York City, working with New York State, working with the federal government, to make sure that we have the resources available to us to build our way out of this affordable housing crisis.”
Blodgett said he has made it his life’s mission to provide New Yorkers — and the rest of the nation — with high-quality affordable housing, something he said can be accomplished only through public-private partnerships.
Tredway focuses on acquiring “at-risk” affordable housing, meaning properties at risk of going market rate, which won’t help the city’s housing crisis. The firm then works with government agencies at different levels — the city Department of Housing Preservation and Development (HPD), the state Homes and Community Renewal, the federal Department of Housing and Urban Development, and others — to make sure the properties it buys remain in that affordable category for the long term.
“It’s very intricate, complicated, arduous, sometimes painful work, but we work very hard to not only build new affordable housing, but to preserve existing affordable housing,” Blodgett said. “But that’s only really possible through public-private partnerships. The only way that we’re going to solve the affordable housing crisis in New York City is to build our way out of it, and the only way we’re going to build our way out of it is through public-private partnerships.”
Ariel’s Shkury is more pessimistic about Mamdani, calling the candidate’s policies “concerning” and voicing worry over the long-term implications.
“You have to ask, ‘What’s going to happen to free-market rents?’ ” Shkury said. “Free-market rents will probably grow, because if your policy restricts supply of housing, and, if you’re not going to allow for rent-stabilized increases, the free-market increases are going to be higher.”
Linde of Property Resources takes a more middle view of what a Mamdani win could mean for the city and its affordable housing momentum.
“On one hand, some of the things Mamdani talks about are really concerning for New York City real estate developers, including the potential impact some of his proposed policies could have on the city’s existing housing stock,” Linde said. “On the other hand, I can’t remember the last time a political candidate discussed increasing staffing at HPD as a key goal during their campaign. However, it’s hard to really know where the line is between what’s an unrealistic campaign promise and what’s actually going to be politically feasible once someone takes office.”
Whoever ends up in the mayor’s office — be it Mamdani, former Gov. Andrew Cuomo or incumbent Eric Adams — the next city administration will have to address and work to solve for the fact that not enough New Yorkers have quality affordable housing.
“I believe that the American dream of upward socioeconomic mobility is still alive and well, and I believe that the three main components of that are health care, education and housing,” Blodgett said. “If people are paying over 50 percent of their income in rent, that American dream of upward socioeconomic mobility becomes a tremendous amount harder.”
Amanda Schiavo can be reached at aschiavo@commercialobserver.com.