As the New York real estate market continues its recovery, land prices have attained record heights. While the price of development may vary from neighborhood to neighborhood, and even from block to block, land prices in Manhattan’s most gilded precincts approach $1,000 per square foot. Even outside Midtown’s “Billionaire’s Row,” land prices in established Manhattan and Brooklyn neighborhoods routinely surpass $500 per square foot.
These eye-watering numbers have dramatically altered the development landscape. While New York’s rents are the highest in the nation, they aren’t high enough, taking account of land prices, to justify rental development. Even condominium sale prices of $1,500 a foot—only recently considered more than respectable—fail to make the grade, as escalating land costs erode profit margins. Predictably, developers have stampeded into the luxury market, while rental housing and modestly priced for-sale construction have languished.
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