Queens' apartment squeeze has an expiration date

Commercial Observer reported the CoStar analysis that puts Queens' second-quarter vacancy at 2.08 percent, down from 2.39 percent a year earlier, with stabilized vacancy at a record-low 1.3 percent, well below the metro average. The pipeline tells a different story: units under construction have fallen 76 percent since early 2024, from 10,881 to 2,597, the shallowest CoStar has recorded in at least a decade.

Victor Rodriguez, CoStar's senior director of market analytics, described it as a classic supply-and-demand story: years of heavy construction pushed vacancies up as newly built towers took time to lease, and with construction now sharply lower, demand hasn't changed, leaving renters to compete for a smaller pool of units.

Two policy questions hung over the borough: developers paused projects waiting for 485-x, the city's tax-abatement program for affordable housing, which carries higher construction wage costs for buildings over 100 units, while others held off until the One LIC rezoning in Long Island City settled, unsure whether their land would be worth more under the new zoning.

Eric Benaim, co-founder and CEO of Modern Spaces, told Commercial Observer his firm usually plans 12 to 24 months out, and the wait around the 485-x wage requirements disrupted projects, including his own; One LIC added a second reason to hold, since developers were not sure what would happen. So they waited.

One LIC passed in November, alongside the Jamaica Neighborhood plan and other Queens rezonings, and since then, Benaim says, development sites have been selling, projects have moved forward, and new projects are being planned. He told Commercial Observer the rezoning is expected to add 15,000 units, with a visible supply response within 30 to 36 months.

A 2.08 percent vacancy describes a market where supply has stopped; a 2,597-unit pipeline describes a market where supply is restarting. The second is why the first is unlikely to persist.

Queens is a direct test of the multifamily repricing now underway. As this publication has argued, apartment capital is consolidating at record scale and smaller deals are being priced on current cash flow rather than forward projections. The borough's record-low stabilized vacancy and 76 percent drawdown in construction make existing rent rolls look scarce, but the policy uncertainty that produced those numbers has just been resolved in the direction of more supply.

485-x was designed to encourage affordable housing, but the higher wage costs attached to buildings over 100 units gave many developers a reason to wait, and One LIC gave them a second. With the zoning now settled, the shallow pipeline reads less like a long-term decline than a release valve being unscrewed.

The 485-x tradeoff was visible in the pause: the program was designed to steer development toward affordability, but its construction wage requirement made the largest projects the most expensive to start. Benaim's point about the 99-unit threshold suggests developers found the cut line quickly, since buildings can avoid the added labor costs by staying just under the unit count. If that behavior persists, it will shape the next pipeline as much as the rezoning itself, producing a different kind of construction than the last cycle's towers but still putting units on the market.

Development-site sales and new project planning are already underway, according to Benaim, the early steps of a construction pipeline being rebuilt. The shallowest pipeline in a decade will not stay shallow indefinitely, and the 15,000 planned units give the vacancy rate a direction once they start coming online. Whether Queens holds at 2.08 percent depends on how fast that zoned supply becomes leasable supply.

Benaim puts the visible effects at 30 to 36 months, with the vacancy data catching up from there. The next two to three years will show whether landlords have been underwriting a permanent scarcity or a temporary pause; the developers who waited out the politics are already betting on the latter, and Benaim says calls have picked up since One LIC passed.