New York City is having a good year in investment sales, and the most telling number in the latest tally is the one nobody is celebrating. CRE Daily reported this week that the city traded $16.2 billion through September, up 13% from a year earlier, across 618 deals. On a per foot basis, though, the market split in two: retail rose 38% to $1,707 per square foot and multifamily and mixed use rose 17% to $804, while development sites slid 67% to $487 per buildable square foot.

Read that again. The finished product is getting more expensive and the dirt underneath it is getting cheaper. In a city with a chronic housing shortage, that is not a contradiction. It is a verdict on how hard it has become to turn land into apartments.

What happened

Demand is not the problem. According to Realtor.com’s latest New York City Rent Report, Manhattan’s median asking rent reached $5,375 in the third quarter, up 8.3% from a year earlier, which takes a household income of about $215,000 under the standard 30% rule. Citywide, the median asking rent hit a record $3,785, and Realtor.com puts citywide asking rents 27.5% above pre pandemic levels. Even in Queens, a median rent of $3,744 now requires roughly $150,000 a year in income.

The capital side is cooling. CRE Daily noted that the third quarter slowed as rate volatility kept buyers and sellers apart, and that office, still the largest asset class at $1.16 billion for the quarter, was down 52% from a year earlier. Queens was the standout, with volume up 173% to $2.34 billion.

Where we see opportunity

When rents are at records and land is repricing down, the spread between what a finished unit is worth and what the site costs gets wider. That spread is where development returns come from. Builders with patient equity and a credible entitlement plan are being offered sites at a basis that would have been hard to find two years ago.

Queens is where I would look first. The volume surge says capital is already moving there, and rents still sit well below Manhattan, which means more of the renter pool can actually pay them. That is the kind of depth you want under a new building.

The other opportunity is in smaller, simpler projects. A citywide average hides enormous variation. Sites that work under existing zoning, without a rezoning fight or the heaviest program requirements, should hold value better than large assemblages that depend on discretionary approvals. Data over emotion: underwrite the specific site, not the headline number.

Where we see the downfalls

Cheap land is usually cheap for a reason. The discount reflects costs that have not gone away: debt that buyers are still pricing hard, labor and affordability conditions tied to the 485-x tax incentive, and approval fights that can stall a project for years. The same CRE Daily issue described a preservation group pushing to block housing on the 122 acre Brooklyn Marine Terminal site, where the city plans 6,000 homes. That is the entitlement bottleneck in a single headline.

There is also a renter ceiling. Realtor.com cites a Census median household income of $106,403 in Manhattan, roughly half of what the median rent now requires. A pro forma that assumes several more years of high single digit rent growth is betting that the top of the K keeps expanding indefinitely. I would not underwrite that.

And the land reset may not be finished. If rates stay elevated, some of today’s discounted sites will look overpriced a year from now.

What we are watching

First, whether fourth quarter development trades confirm the reset or show bidders coming back. Second, whether the cost of debt settles enough to close the gap between buyers and sellers; CRE Daily expects bidding to stay selective until it does. Third, whether the steady drip of outer borough site sales turns into actual starts, because a land trade is not a housing unit.

If you are weighing a development site in New York, or anywhere land has repriced faster than rents, the hard work is the feasibility and entitlement math, not the purchase price. That is the work we do through site, feasibility, and capital structure reviews at Kaufman Real Estate & Consulting: https://www.kaufmanrealestateandconsulting.com

About the Author

I’m the founder and CEO of Kaufman & Company, a private investment and holding firm working across real estate development, venture investment, and infrastructure. My focus is workforce housing and employer-anchored development, including mountain resort communities through Oldivai.

Reach me at Daniel@kaufmanredev.com or find more at danielkaufmanre.com.

Sources

NYC Investment Sales Reach $16.2B in Nine Months as Q3 Momentum Cools, CRE Daily, October 27, 2026, https://www.credaily.com/newsletters/new-york/issue/nyc-investment-sales-reach-16-2b-in-nine-months-as-q3-momentum-cools/

Manhattan Renters Now Need To Make $215K To Afford the Typical Apartment, Realtor.com, October 27, 2026, https://www.realtor.com/news/trends/nyc-rent-manhattan-income-required-q3-2026/