Top 5 Locations in New York for a Ground-Up Construction Project

New York City is one of the world’s most vibrant, exciting, and desirable places to live. However, this popularity has created a huge supply and demand issue for housing. In 2023, just 1.4% of apartments were sitting vacant. New York’s mayor Eric Adams acknowledged this, saying “The data is clear: the demand to live in our city is far outpacing our ability to build housing. New Yorkers need our help, and they need it now.”

While local government looks at ways to bring new homes to market – including proposals to build more affordable homes and introduce zoning reforms – there are lots of opportunities for those who want to invest in ground-up construction.

But, with land at such a premium, where do you start?

What to consider when planning a ground-up construction project in New York

New York is one of the most densely populated cities in the USA, so finding land to build on is going to be your first challenge. But there are other complexities, opportunities, and risks to consider.

Zoning regulations

Understanding zoning regulations is critical for any development project, but especially in New York City. Zoning laws determine the type and scale of structures that can be built in specific areas. For example, some areas may have height restrictions, limitations on floor-area ratios, or requirements for mixed-use development. Investigating recent rezoning efforts, may offer new opportunities or incentives: particularly in neighborhoods like Gowanus or East New York.

You can quickly explore these restrictions using the NYC Zoning & Land Use Map (ZoLa), Which overlays zoning designations across a map of the city.

Brownfield redevelopment programs

Properties classified as brownfields were previously used for industrial or commercial purposes and are potentially contaminated. Redeveloping brownfields can be complex, but programs like New York State’s Brownfield Opportunity Area (BOA) provide technical assistance, grants, and tax credits to help offset remediation costs.

Engaging with these programs can make less desirable properties both feasible and profitable for redevelopment: especially when coupled with community support and sustainable development practices.

Community engagement

Actively engaging with local community boards, neighborhood associations, and advocacy groups helps to ensure your projects align with local needs and aspirations. This can help secure community support and mitigate opposition. Engaging with residents can also provide valuable insights into specific challenges: such as infrastructure gaps, local amenities, or environmental concerns. This allows property developers to design projects that integrate seamlessly into the community fabric.

Sustainability and resilience

Due to climate change and urban growth, New York City is prioritizing sustainable and resilient development. Integrating green building practices, such as LEED certification, energy-efficient systems, and climate-resilient infrastructure, can make it easier to get planning permission. Find out more about how to conduct a sustainable ground-up construction project.

Incorporating green spaces, permeable surfaces, and renewable energy sources can reduce environmental impact and make properties more attractive to potential buyers or tenants. Programs like NYC’s Climate Resiliency Design Guidelines can provide a roadmap for incorporating these principles into your project.

Incentives and funding

There are lots of incentives available for developers looking to invest in New York City. Programs like 421-a (Affordable New York Housing Program) offer tax exemptions for developers who include affordable housing units in their projects.

The city and state also provide grants for projects that address specific goals, such as affordable housing, community development, or environmental remediation. In addition to the benefits of partnering with a hard money lender, understanding and using these incentives can help to enhance the financial viability of your project.

Infrastructure and accessibility

When choosing a development site, consider the availability of transportation, utilities, and other infrastructure. Being near subway lines, bus routes, and major highways can significantly increase a property’s value and attractiveness. Additionally, think about the potential need for infrastructure upgrades: like water and sewage systems or power supply as these can add to project costs. Collaborating with city planning and utility agencies early in the process can help lessen unexpected challenges.

Market trends and long-term potential

Keep an eye on emerging market trends and demographic shifts. For example, neighborhoods experiencing an influx of young professionals, artists, or families may offer high growth potential. Similarly, areas with planned public investments, such as new parks, schools, or transportation projects, are likely to see increased demand. Balancing immediate costs with long-term potential is key to making informed decisions.

Best neighborhoods in New York City for a ground-up construction project

These five neighborhoods have especially good potential for developers.

East New York, Brooklyn

East New York has a significant number of vacant and underutilized properties, including brownfields identified through community brownfield planning initiatives. Historically, property costs in the area have been lower compared to other Brooklyn neighborhoods. However, recent rezoning efforts are encouraging affordable housing and mixed-use developments, creating potential for increasing property values.

Although the neighborhood has faced its share of economic challenges, ongoing revitalization efforts and improvements to infrastructure are making it more appealing to residents. This is a key area for investment.

Gowanus, Brooklyn

There are substantial opportunities for development in this neighborhood, especially around the Gowanus Canal. This area features lots of brownfield sites from its industrial past. The ongoing Superfund cleanup of the canal has spurred interest in the area, complemented by recent rezoning efforts designed to encourage residential and commercial development.

While property costs in Gowanus have been rising, the neighborhood remains attractive for projects aligned with environmental remediation and sustainable growth. Its proximity to Park Slope and Downtown Brooklyn, along with an emerging arts scene and planned green spaces, further enhance Gowanus’s desirability as a development hotspot.

Harlem, Manhattan

Harlem, especially East Harlem, stands out as a prime location for development. Like East New York, it has many empty and underused properties, including brownfield sites targeted by community planning initiatives.

Property costs in Harlem are generally more affordable compared to other parts of Manhattan, and rezoning plans aim to encourage mixed-use developments and affordable housing, offering incentives for developers.

With its rich cultural heritage and significant recent investments, Harlem continues to grow in appeal for both residents and businesses. So whether you’re planning on venturing into commercial property or maximizing your rental returns, there are many opportunities in this neighborhood.

South Bronx

The South Bronx has a long industrial history, which has left lots of brownfield sites ripe for redevelopment. Community-driven initiatives, such as the South Bronx Community Brownfield Planning Study, are actively identifying strategic sites to transform into productive community assets.

Property prices in the South Bronx remain relatively affordable compared to other New York City neighborhoods, and recent rezoning efforts aim to stimulate both residential and commercial growth.

The neighborhood’s desirability is on the rise, boosted by improved transport links and a focus on sustainable development.

Brownsville, Brooklyn

Brownsville, Brooklyn, has an abundance of vacant lots. Many have been repurposed as community gardens, but remain ripe for new construction. The neighborhood is also among the most affordable in Brooklyn, making it a cost-effective option.

Zoning regulations support residential development, with a focus on increasing affordable housing options as part of broader city efforts to revitalize the area.

While Brownsville faces socio-economic challenges, ongoing community initiatives and city investments are bringing improvements – positioning the neighborhood as a potential growth area.

Finance your New York construction project

Ground-up construction in New York City brings a range of unique challenges: from navigating zoning regulations and remediating brownfield sites to addressing community needs and sustainability goals. However, with the right strategy and partnerships, these challenges transform into lucrative opportunities.

Whether you’re eyeing the affordable potential of East New York, the cultural vibrancy of Harlem, or the revitalization of the South Bronx, having a reliable financing partner is critical to realizing your vision.

At Express Capital Financing, we specialize in providing hard money loans tailored to developers navigating New York’s dynamic real estate market. Our expertise in funding projects in complex environments ensures that you have the financial support to move swiftly and confidently, turning even the most ambitious plans into reality.

Apply now and let Express Capital Financing help you build the future of New York.