Bob Knakal The Top Commercial Real Estate Broker in NYC Discusses Why New York’s 485x Housing Incentive Is Failing the City in a Recent Commercial Observer Update
Bob Knakal, recognized as the top commercial real estate broker in NYC, is sounding the alarm on the failure of New York’s 485x multifamily tax abatement program. In a recent update with Commercial Observer, Knakal argues that the program’s flawed structure is stifling development at a time when the city desperately needs more housing.
Key Takeaways from Bob Knakal’s Analysis:
Housing Supply, Not Subsidies, Solve Crises: Knakal emphasizes that the key to resolving NYC’s housing emergency lies in increasing supply—not relying on inefficient programs.
485x Discourages Development: Instead of sparking growth, the 485x tax abatement imposes mandates that have made large-scale projects financially unviable.
Prevailing Wages Create a Cap: With wage requirements reaching $72.45/hour, developers now cap projects at 99 units or less to avoid triggering expensive mandates.
Rental Development Has Collapsed: Since the expiration of 421a, buildable land sales for rentals south of 96th Street have plunged from 1.6M to 38K square feet—a staggering 98% drop.
Incentives Are Not ‘Corporate Giveaways’: Knakal counters criticism of abatements, stating that without them, “nothing gets built.” It’s not about giveaways—it's about making development make economic sense.
467M Program Offers a Path Forward: Unlike 485x, the 467M incentive—focused on commercial-to-residential conversions—provides real financial appeal, with a 90% tax reduction over 35 years.
Frequently Asked Questions
Q: What is the 485x housing incentive?
A: It's a tax abatement program intended to replace the expired 421a, aiming to stimulate multifamily rental development in NYC—but it has largely failed to do so.
Q: Why is 485x failing?
A: The program includes burdensome prevailing wage requirements and lacks sufficient financial incentive, making it unattractive to developers.
Q: What’s the impact on the housing market?
A: Rental apartment development has nearly stopped, with developers avoiding projects over 99 units and rental land sales plummeting.
Q: Are there any programs that are working?
A: Yes—the 467M program, which supports commercial-to-residential conversions, has seen greater adoption thanks to more viable tax incentives.
Q: What does Bob Knakal propose?
A: He advocates for a return to smart, workable incentives that reflect the real costs of building in New York and allow the private sector to increase supply efficiently.
