CMBS Weekly: Block-buster

Research evidence excerpt

CMBS Weekly: Block-buster

7.2k units per year of market rate

housing supply to NYC between 2010 and 2019

New York City Housing Supply

High Income/Vacancy Deregulation

Tax-Credit Expirations and Other

New Constructions Less Demolitions

Permits

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Source: New York City Housing NYC and Housing Supply Report, J.P. Morgan

To Mayor Mamdani’s credit, his Block by Block plan aspires to deliver 200k units over the

next 10 years and aims to remove some red-tape to allow for faster development. But the

thrust of the proposal is for the public sector to lead the way, with coordination across multi-

ple agencies, not to mention coordination with the State. The New Rochelle development

was done through a public/private partnership involving the city removing red-tape and a

private master developer, RDRXR, owning the development and assemblage risk in

exchange for real estate options. In addition, the affordability goal is also deeper for Mayor

Mamdani compared to that of the New Rochelle developments.

The pain for NYC stabilized multifamily is likely to continue under this administration and

for CMBS, the most visible pain sits in the FRESB market where NYC serious delinquen-

cies sit at 22% as credit in this market has all but disappeared. Fortunately, this footprint isn’t

large at just $1.3bn or 0.12% of the GSE CMBS market. The opportunity lies in the private

label CMBS market and more specifically in some of the New York City multifamily SASB

deals that are backed by market rate units and/or tax-credit related rent-stabilized units that

become market rate units over time and are not permanently rent-stabilized under the HST-

PA.