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Curtesy of David Watkis on Unsplash
Understanding 99-Unit Buildings in NYC
New York City’s skyline is evolving. A new development trend is reshaping the real estate industry. Buildings with exactly 99 residential units are appearing across the city.
This pattern is intentional, driven by the 485-x tax abatement program. For luxury buyers and sellers, understanding this trend is essential. It impacts supply, neighborhood character, pricing, and investment opportunities.
What Is the 485-x Program, and Why 99 Units Matter
Enacted in 2024, New York State adopted Real Property Tax Law § 485-x. Also known as the Affordable Neighborhoods for New Yorkers (ANNY/485-x) Program.
Projects with 100 or more units must meet higher wage standards. Construction workers earn at least $40/hour, and developers must comply with additional rent-stabilization and affordability requirements.
By staying below 100 units, developers avoid these higher labor costs. They still qualify for tax abatements under 485-x if specific affordable unit set-asides are met.
This threshold has led to a surge in filings for 99-unit buildings. Over the past four quarters, 28 permits were filed for 99-unit developments and more than double the total under this category in the previous 16 years combined.
External link suggestion: NYC 485-x Program
External link suggestion: Developers Build 99 Unit Buildings to Avoid Wage Requirements and New York City Real Estate Tax Incentives 421a – 485-x and 467-m requirements.
Impacts on Luxury Buyers & Sellers
This trend impacts supply and neighborhood dynamics. The 99-unit cap favors mid-rise, boutique developments over large towers.
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Sellers may face less competition from mega-developments.
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Buyers should note the potential crowding of mid-rise luxury units.
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Neighborhood character may shift as more boutique buildings appear.
Pricing, Amenities, & Per-Unit Cost
Smaller buildings must meet high standards in terms of structure and amenities, including elevators, HVAC systems, lobbies, and safety features. However, with fewer units to spread fixed costs, the per-unit cost tends to rise. Developers of 100 units or fewer can forego higher wage bills, which helps. However, many costs remain, including land, materials, design, and financing. Luxury buyers should anticipate premium pricing in newer 99-unit builds compared to older, similar units, especially when luxury finishes are involved.
Sellers and buyers benefit from:
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Optimized tax advantages
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Accurate cost modeling for renovations or purchases
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Long-term resale and rental projections
Investment & Financing Implications
From an investment standpoint, projects capped at 99 units may have tighter margins, especially under rising interest rates and high land acquisition costs. However, the tax incentives under 485-x still make these projects more financially viable than they might be without them. Sellers should consider how these incentives affect depreciation, tax treatment, and resale potential.
Strategic Opportunities & Risks
Opportunities
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First-mover advantage: In neighborhoods where 99-unit projects are newly permitted, early sales or pre-sales in luxury units may capture premium value, especially for units with views, unique layouts, or rare amenities.
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Positioning within mid-rise boutique: Sellers and developers can market 99-unit buildings as offering more attention to detail, less density, which appeals to specific luxury buyers.
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Tax incentive optimization: For buyers and investors, understanding 485-x’s requirements—affordable unit set-asides, income bands, rent stabilization, etc.—allows structuring purchases or joint ventures that maximize value while complying with regulation.
Risks
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Regulatory change: Changes to laws or administrative rules could alter wage thresholds, affordability requirements, or tax benefit timelines.
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Value compression: If many 99-unit buildings are developed nearby, competition may drive down prices or render unit uniqueness a less significant differentiator.
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Cost increases elsewhere: Even if wage mandates are avoided, supply chain costs, land taxes, and infrastructure costs remain high.
My Value as Your Luxury Real Estate Advisor
With a Wall Street foundation in risk analysis, financing, and market trends, I bring deep financial rigor to my clients. My project management experience ensures that I not only see what is being built, but also how and when—and at what cost.
Through Coldwell Banker Warburg’s RealVitalize Program, I work closely with clients on repositioning, renovating, and enhancing property value—whether for sellers preparing their homes for the market or buyers seeking luxury with value.
Moreover, Coldwell Banker Warburg’s vast national and global network means access to cross-border capital, buyers, and off-market opportunities. Investing in a 99-unit development or selling a luxury unit in such a building, you benefit from that reach, ensuring your transaction is positioned optimally, priced correctly, and marketed to the highest echelon.
What Buyers & Sellers Should Do Now
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Conduct due diligence on any new 99-unit project: review the developer’s financials, wage obligations under 485-x, budget for amenities, and legal restrictions (including rent stabilization).
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For sellers of luxury units in 99-unit buildings, emphasize unique features (such as views, high-end finishes, and limited exposure) since competition is increasing.
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For buyers, consider long-term resale and rental demand: how will nearby developments with 99 units or more affect your view, light, and neighborhood prestige?
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Use project management and cost modeling to ensure that the seller’s improvements or the buyer’s purchase include a realistic estimation of both hard and soft costs, taxes, and incentives.
Changing Landscape of New York
The 99-unit building trend under 485-x is more than a regulatory quirk. It is changing the shape of New York City’s development, particularly in the luxury segment. For high-end buyers and sellers, being fluent in this policy, its implications, and knowing how to leverage or protect value is no longer optional. My Wall Street experience, project management skills, and deep connection to Coldwell Banker Warburg’s services provide you with insight and execution capability to navigate this terrain confidently.
