NYC Greenlights Largest Rezoning Effort in Two Decades

NYC just approved its biggest residential rezoning in 20 years—nearly 10,000 new homes are coming to Midtown South.

Jordan B.
August 08, 2025

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Good morning. NYC just took a major step toward reshaping Midtown South. A newly approved rezoning plan could deliver nearly 10,000 homes, and kick off a wave of housing-focused redevelopment across Manhattan.

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Market Snapshot

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Pct Chg:
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FTSE NAREIT

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10Y Treasury

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SOFR

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*Data as of 08/07/2025 market close.

MIDTOWN MAKEOVER

NYC Greenlights Largest Rezoning Effort in Two Decades

Midtown South is on track for a major residential revival as NYC pushes forward its boldest rezoning plan in 20 years.

Big plans, bigger impact: The Midtown South Mixed-Use Plan cleared a key hurdle with approval from NYC Council’s Land Use and Zoning Committees. It calls for 9,700 new homes—over 2,800 permanently affordable—in the city’s largest rezoning since the Bloomberg era.

Inclusion hits Midtown: For the first time, Mandatory Inclusionary Housing will apply in Midtown South, aiming to boost affordability in a traditionally commercial area. The city is also investing $488M in infrastructure upgrades, including lighting, green space, school and hospital improvements, subway renovations, and a pedestrian-focused busway.

Mayoral vision: Mayor Eric Adams called the plan “a down payment” on his goal to build 100K new homes across Manhattan in 10 years, with housing and infrastructure growing together. The final City Council vote is still pending, but momentum is strong.

Momentum builds: The rezoning comes on the heels of several major residential projects in Manhattan. These include:

Hudson Yards Phase 2: 4,000 new homes, including 625 affordable units, part of a $32B megaproject.
5 Times Square: An office-to-resi conversion with over 1,250 units (313 affordable).
Former Pfizer HQ on East 42nd: Slated for 1,602 apartments, 25% of which will be affordable.

➥ THE TAKEAWAY

The new playbook: Rezoning is now NYC’s go-to tool for tackling the housing crisis. As Midtown South shifts from business hub to mixed-use, mixed-income neighborhood, real estate players should prepare for an era where housing and infrastructure go hand-in-hand.

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✍️ Editor’s Picks

Required reading: Upgrade your bookshelf with this curated list of must-read CRE books for every role, from first-time analyst to seasoned pro. (sponsored)
Asset access: Trump will sign an executive order allowing 401(k) plans to include private equity, real estate, crypto, and other alternative assets.
Market jitters: Trump’s firing of the BLS chief has shaken trust in federal economic data, raising fears of politicization and market instability ahead of the next CPI release.
Debt recovery: CRE debt markets are regaining momentum despite policy-driven volatility, with tightening spreads, rising originations, and a broader, more active lender base.
Copper crunch: Trump’s 50% tariff on finished copper goods is driving up construction costs across the US, forcing developers to rework budgets and rethink projects.
Regional divide: Southeast metros like Nashville, Houston, and Orlando led CRE performance in Q1, while California markets continued to lag.
Trump effect: Six months into Trump’s second term, Washington DC’s CRE market remains bruised but not broken.

🏘️ MULTIFAMILY

Renter behavior: DC claimed the top spot in renter interest, while online apartment search activity surged across more affordable Sun Belt and Midwest metros.
Supply shift: US apartment construction is slowing after a historic peak, while record-breaking renter demand in Q2 has flipped the market.
Rezoning rush: Massachusetts’ MBTA Communities law is unlocking thousands of new multifamily units and sparking fierce competition for development sites.
Regional runners: Mid-sized and affordable metro areas like Albany, Winston, and Columbia are leading the nation in SFR rent growth, far outpacing larger coastal markets.

🏭 Industrial

Occupancy streak: Despite rising vacancies from tenant move-outs and new supply, the US industrial sector marked its 60th straight quarter of net absorption.
Data demand: Investor demand for data centers remains robust in 2025, with AI-driven hyperscale development leading capital allocation.
Grid relief: Google will curb AI data center energy use during peak demand in new utility deals, helping ease power grid strain.

🏬 RETAIL

Loan extensions: Struggling to refinance, $1.75B in CMBS mall loans have been extended—some up to 7 years—as owners seek sales or redevelopment.
Property default: The Jackson Group has lost its last San Francisco properties after loan defaults and steep valuation drops on Union Square retail assets.
Tween trouble: Claire’s has filed for Chapter 11 again, listing over 1,100 stores for potential closure as it faces liquidation.
Retail revival: A once-struggling outdoor mall in Vacaville, CA is nearly fully leased after renovations attracted national and local tenants.

🏢 OFFICE

Production boost: Hudson Pacific Properties signed over 1.2M SF in new office leases this year and anticipates a studio rebound with expanded California film tax credits.
Billionaire's row: TF Cornerstone will turn Midtown's Tower 57 into 350 mixed-income apartments using new tax incentives and rezoning laws.
Fire fallout: Altadena’s fire-damaged commercial sites face slow recovery as owners weigh rebuilding or selling amid high costs, tight zoning, and uncertain demand.
Denver default: The Wells Fargo Center in Denver lost 76% of its value since 2019, leaving top-rated bondholders exposed.

🏨 HOSPITALITY

CMBS concerns: Despite improving delinquency rates, limited-service hotels remain the weakest link in CMBS lodging.
Soft quarter: Summit Hotel Properties posted a 3.6% drop in same-store RevPAR for Q2 2025 amid price-sensitive travelers and event-driven comps.

📈 CHART OF THE DAY

US agency mortgage-backed securities, totaling around $9T, are evolving as more detailed data from housing agencies enables targeted strategies for housing sustainability.