August 7, 2016
By Stephanie West
New York, NY – The number of residential permits issued by the New York City Department of Buildings (DOB) dropped by more than half in the 12 months after the demise of the 421-a program. During the 12-month period running from the anticipated expiration of the program on July 1, 2015 through June 30 of this year, the DOB authorized construction of 20,144 new units of housing in the five boroughs, a drop of 62 percent from the 52,618 residential permits that were issued between July 1, 2014 and June 30, 2015.
"New York City's residential sector essentially experienced a perfect storm of circumstances between late 2014 through the middle of last year," said New York Building Congress President Richard T. Anderson. "In addition to the investment community's continued and seemingly insatiable appetite for residential projects, local developers were working furiously to get their projects fully permitted in advance of anticipated changes to the 421-a program. All of this produced an unprecedented, one-time surge in permits."
Mr. Anderson added, "While many observers had expected the number of permits issued post-421-a to plummet in the face of the expired benefits and as new development was absorbed, judging from the numbers, it appears that the market merely paused to catch its breath. Of course, the residential sector is cyclical, so the big question is what happens when the market cools, especially if an agreement can't be reached on a successor to 421-a."