NYC has a housing paradox: despite a high demand for affordable housing, a significant number of apartments remain vacant. A critical question in New York City’s housing crisis is whether the number of vacant apartments can meet the city’s housing demand. The number of vacant units, on its surface, would suggest that there is enough housing supply to meet the needs of, and house, all residents. However, the reality is far more complicated.

The Reality of Vacancy Rates

In 2023, the New York City housing market had thousands of vacant units at any given time. Still, the city faced an overwhelming shortage of affordable housing. The vacancy rate for “affordable” apartments (those participating in city or state affordability programs) is significantly lower than for market-rate apartments. This reflects a profound imbalance: while there are vacant units, many of them are priced far beyond what low- and middle-income New Yorkers can afford.

Many of the vacant units in New York City are high-end or luxury apartments, particularly in newly constructed developments in Manhattan (think Billionaire’s Row) and parts of Brooklyn. These units are marketed toward very high-income renters and international buyers, leaving them far out of reach for most city residents. At the same time, affordable apartments—those that lower-income families could afford—are far more scarce. In some cases, affordable apartments have vacancy rates as low as 1%, indicating an extreme shortage of units for the city’s most vulnerable populations.

The Role of Warehousing

One of the key drivers behind the high vacancy rates in certain segments of the housing market is a practice known as “warehousing.” This is a process where landlords, particularly those who own rent-stabilized buildings, are increasingly leaving units vacant in hopes of deregulating them in the future or waiting for market conditions to improve. With stricter rent control laws introduced in recent years, many landlords find that the regulated rent they can charge for a rent-stabilized unit is insufficient to cover the costs of maintenance and taxes. As a result, they opt to keep these units vacant, effectively removing them from the housing market.

Warehousing specifically affects rent-regulated apartments, which are supposed to serve as a vital component of the city’s affordable housing stock. This practice leaves thousands of units vacant at a time when the city desperately needs more affordable housing. Critics argue that this is a form of speculative behavior (the landlords are lobbying to have the amount they can increase rent to cover improvements to be raised by the city, or change the rules that allow for the units to be deregulated entirely) that worsens the housing crisis by artificially constraining supply.

Mismatch Between Supply and Demand

The vacancy rates further reveal a significant mismatch between where affordable housing is located and where it is needed. Many new developments are being built in areas that already have relatively high vacancy rates, such as parts of Manhattan and downtown Brooklyn. These developments often focus on market-rate or luxury housing, despite the growing need for affordable units in neighborhoods like the Bronx, East New York, and parts of Queens.

Even when new affordable units are built in these areas, they are priced based on Area Median Income (AMI) levels that are too high for local residents. For example, many technically “affordable” units are targeted at households earning 80% to 130% of AMI, which translates to incomes of $85,000 or more. In neighborhoods where the median income is closer to $40,000, these “affordable” units are still unaffordable for the majority of residents. This geographic and income-based mismatch exacerbates the housing crisis, leaving many low-income households without viable housing options while luxury units remain empty.

How Vacant Units Could Alleviate the Crisis

Even if a fraction of these vacant units—particularly rent-stabilized apartments—were brought back onto the market, it would have a significant impact on housing affordability. By enforcing stricter rules around warehousing and incentivizing landlords to rent out vacant units, the city could alleviate some of the housing pressure on low-income renters.

A potential policy solution is the imposition of vacancy taxes or penalties on landlords who leave units empty for extended periods. Such measures have been proposed in cities like San Francisco and Vancouver, where similar warehousing practices have contributed to rising housing costs. By taxing vacant units, cities can create a financial incentive for landlords to rent out their regulated apartments. Another option is to offer subsidies or low-interest loans to landlords to help cover the cost of necessary repairs and maintenance, making it more financially viable for them to rent out these units.

Vacant Apartments: One Part of the Solution

While the sheer number of vacant apartments in New York City might suggest that there is enough housing to meet the demand, the reality is more complex. A significant portion of these units are either too expensive for the average renter or are being intentionally left vacant by landlords. The result is a housing market that fails to serve the city’s most vulnerable populations, even as thousands of apartments remain empty.

To address this issue, policymakers should take steps to bring vacant rent-stabilized units back onto the market. By cracking down on warehousing and creating incentives for landlords to rent out their vacant units, the city can make meaningful progress toward alleviating its housing crisis. However, without targeted interventions, the mismatch between supply and demand will continue to grow, and New Yorkers will remain trapped in an increasingly unaffordable housing market.

April, 2023

RESEARCH TEAM

Galia Solomonoff, Director

Eddie Palka, Adjunct Associate Research Scholar, ‘18 M.Arch

Kavyaa Rizal, Graduate Research Assistant, ‘23 MSUP

Jamon Mok, Graduate Research Assistant, ‘23 MArch

Lula Chou, Graduate Research Assistant, '24 MSRED, MArch