NYC’s groundbreaking “City of Yes” zoning reforms are opening doors to new property value. These pro-development changes allow more density, offer tax incentives, and create fresh opportunities for conversions and growth. Learn how your property can benefit – and how BKREA can help you capitalize.
“The most overwhelmingly positive zoning legislation the city has implemented since 1961”
- Bob Knakal
City of Yes is New York City’s sweeping zoning reform initiative (adopted in late 2024) aimed at addressing the housing crisis. It’s widely hailed as the most significant update to NYC’s zoning code in decades – in fact, Bob Knakal calls it “the most overwhelmingly positive zoning legislation the city has implemented since 1961”. In practical terms, City of Yes modernizes outdated rules to encourage more housing construction in every neighborhood. The reforms are projected to enable roughly 80,000+ new homes citywide over the next 15 years , with nearly 9,700 new units envisioned in Midtown South alone. By saying “yes” to smart growth – from higher-density development to easier office-to-residential conversions – NYC is unlocking opportunities that were off-limits under old zoning.
If you own property in New York City (especially in Midtown South or other areas impacted by these changes), City of Yes can directly boost your asset’s financial upside. Here’s how the new zoning reforms create value for property owners:
Developers are equally energized by City of Yes – it’s reshaping the development playbook in NYC. Whether you build ground-up projects or convert existing buildings, these reforms create new avenues for profitable development:
In the evolving landscape of New York City real estate, few changes carry the potential for lasting impact like Real Property Tax Law § 467-m. Known as 467-M, this state-level legislation creates a powerful new incentive for developers to convert underutilized commercial buildings into affordable housing — and veteran broker Bob Knakal believes it could be a game-changer.
“New York City doesn’t have a land shortage — it has a zoning and utilization problem,” said Knakal, Chairman and CEO of BKREA. “467-M is a step in the right direction. It takes obsolete office space and turns it into what the city needs most: housing.”
Enacted through New York State’s Real Property Tax Law, Section 467-m — formally called the Affordable Housing from Commercial Conversions Tax Incentive Benefits (AHCC Program) — provides partial property tax exemptions for up to 35 years. The goal: encourage developers to convert older, non-residential buildings into mixed-income residential properties.
The law applies to projects that begin after December 31, 2022, start no later than June 30, 2031, and finish by December 31, 2039. To qualify, buildings must include at least six rental units, with 25% designated as affordable housing — including units for tenants earning as little as 40% of Area Median Income (AMI). These affordable units must be permanently rent-stabilized and offer equal access to amenities and entrances as market-rate units.
For buildings with 30 or more residential units, the law requires payment of prevailing wages to building service workers — unless affordability thresholds are exceeded, creating flexibility for larger projects.
The length of the property tax exemption — 25 to 35 years — depends on the start date of the conversion. This structure is intended to make pro forma underwriting more viable in a market where rising construction costs and uncertain rent stabilization laws have discouraged new development.
With decades of experience and over 30 million buildable square feet sold, Knakal has long advocated for adaptive reuse of buildings in Manhattan’s dense core.
“When we sold development sites, we were often creating new buildings from the ground up. But now, some of the biggest opportunities lie in transforming existing space. 467-M gives owners a reason to think creatively — and a reason to act now,” Knakal said.
In Knakal’s view, 467-M is more than a tax incentive — it’s a mechanism to realign the built environment with current economic realities. Office vacancy rates remain elevated, particularly in Class B and C buildings, while the city’s need for housing — especially affordable housing — grows more urgent by the month.
Critics of 467-M point to challenges: navigating regulatory compliance, securing financing for complex retrofits, and concerns about long-term rent stabilization burdens. But for Knakal and other market experts, the program offers a rare alignment of public need and private incentive.
“The smart players in the market are already scouting conversion candidates. If done right, these projects can unlock long-term value — not just for developers, but for neighborhoods and the city as a whole,” said Knakal.
1. What buildings qualify for 467-M conversions?
Eligible buildings must be non-residential (excluding hotels and certain multiple dwellings) and located within zoning districts that allow residential use or can be rezoned accordingly.
2. How long is the tax benefit under 467-M?
The property tax exemption lasts between 25 to 35 years, depending on when the project begins. Earlier projects can lock in longer benefit periods.
3. What defines “affordable” under 467-M?
At least 25% of the units must meet affordability criteria, including a portion designated for households earning 40% of Area Median Income (AMI). These units must remain affordable and rent-stabilized permanently.
4. Are there any wage requirements for building staff?
Yes. For conversions with 30 or more units, developers must pay prevailing wages to building service employees, unless they meet deeper affordability requirements.
5. Can developers use 467-M for condo conversions?
No. 467-M only applies to rental housing conversions. Condo or co-op conversions are not eligible for the AHCC Program.
6. How does 467-M affect long-term building value?
While rent-stabilized units may affect short-term cash flow, the 467-M tax exemption helps offset those impacts, making projects financially viable and increasing long-term asset value through strategic reuse.
467-M is more than a tax incentive — it’s a signal. A signal that the city is finally willing to reward creative development that serves a public need. For experienced players like Bob Knakal, this is the kind of policy shift that doesn’t just move markets — it reshapes them.
“The developers who understand how to navigate policy and zoning, who know how to work within these frameworks — they’re the ones who are going to redefine entire neighborhoods,” said Knakal.
Navigating the complexity of these new zoning rules and incentive programs can be daunting. This is where BKREA (Bob Knakal Real Estate Advisors) comes in – to translate policy into profit for you. We’re a team of NYC commercial real estate experts who specialize in maximizing property value for owners, and we’ve been at the forefront of understanding City of Yes. In fact, our CEO Bob Knakal has been an outspoken supporter and thought leader on these reforms, even publishing a guide of 45 NYC property conversion case studies to illustrate creative ways to unlock value under the new rules. Our mission is to help you capitalize on this moment. Here’s what we bring to the table:
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We start by analyzing what City of Yes means for your property. Zoning can be complex – FAR, UAP, MIH, conversions, tax incentives – but our team will break it down in clear terms. We’ll review your lot’s new development potential, additional floor area or units now possible, and any applicable incentive programs. Then we’ll outline the strategic options (e.g. redevelopment vs. sale) that make the most sense for maximizing value. Our guidance is technically grounded – we understand the regulations inside-out – but also pragmatic, focused on what yields the best financial outcome for you.
As a brokerage and advisory firm, BKREA connects property owners with the right developers and investors to realize that unlocked value. Bob Knakal has brokered the sale of over 2,351 NYC buildings totaling ~$22 billion in value over his career, giving us an unparalleled network in the industry. We know who is actively looking for conversion opportunities, who’s assembling sites for high-density projects, and where the capital is coming from. By listing your property through BKREA, you gain instant credibility and exposure to this network. Our marketing platform, coupled with Bob’s reputation as one of NYC’s top investment sales brokers, ensures that every qualified buyer will know about the opportunity your property presents under City of Yes. That competition drives up value, resulting in the highest possible price or best terms for you.
From initial valuation to closing the deal, we’ll be by your side. Considering a sale? We will position your property to highlight its untapped City of Yes potential – crafting the narrative and materials that resonate with buyers or development partners. Prefer to hold and develop? We can introduce you to joint venture partners, help you understand development pro formas, and even advise on navigating city approvals or incentive applications. Our team’s experience spans decades of complex transactions and land use deals, so we anticipate challenges and handle the heavy lifting. The bottom line: we make the process smooth and successful. When you work with BKREA, you’re not just getting brokers – you’re getting trusted advisors who are as invested in your outcome as you are.
By leveraging our expertise, property owners can confidently move forward knowing they have the #1 City of Yes resource on their side. We translate policy into profit and ensure you reap the rewards of these reforms with minimal hassle.
Every property is unique – and the City of Yes reforms impact each one differently. Get in touch with us.
Download our City of Yes Opportunity Guide – a free resource packed with insights on NYC’s new zoning changes, tailored for property owners. Learn the key takeaways and next steps to consider for your asset (written in plain English, not legalese).
Schedule a Call with Our Listing Team – set up a one-on-one consultation with a BKREA expert. We’ll discuss your specific property, evaluate its new potential under City of Yes, and give personalized advice on how to maximize its value. No obligation – just insight.
The city has said “yes” to new opportunity – now it’s your turn to act. Unlock your property’s potential by partnering with a team that knows how to navigate this evolving landscape. Contact BKREA today and let’s make these zoning reforms work to your advantage.
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