Read the Full Article on Commercial Observer - Click Here
Zohran Mamdani and New York policymakers continue debating how government can fund and create more housing. But according to Bob Knakal, the real solution is far simpler: government should stop trying to directly build housing and instead focus on creating the economic conditions that allow the private sector to produce it efficiently at scale.
The argument is rooted in economics, not ideology. New York already has experienced developers, lenders, architects, engineers, contractors, and capital ready to build. What the city lacks is a regulatory and financial environment that makes housing development economically viable.
The core argument is that housing shortages are fundamentally tied to supply constraints and development economics. When projects “pencil” financially, private capital enters the market aggressively. When incentives disappear and costs rise, development slows.
Programs like the former 421a tax abatement acknowledged this reality by helping offset New York’s unusually high development costs. Once those incentives vanished, many projects became financially impossible despite continued demand for housing.
According to this perspective, the city’s role should not be to replace private developers, but to create the conditions that encourage them to build more rapidly and at greater scale.
The article argues that New York’s current housing goals reflect a scarcity mindset shaped by bureaucratic timelines rather than actual construction capacity.
With aligned incentives and streamlined approvals, the city could potentially accelerate production dramatically because the underlying ecosystem already exists:
The limiting factor is not capability — it is policy and economics.
Housing affordability, supply shortages, and development policy remain among the most important economic issues facing New York City. The debate increasingly centers on whether government-led programs or market-based incentives are the most effective path toward increasing housing supply.
This argument positions incentives, predictability, and pro-development policy as the fastest and most scalable way to produce meaningful housing growth.
The article argues that New York City should focus on incentivizing private-sector housing development rather than trying to directly build housing through government programs.
It argues that excessive bureaucracy, slow approvals, and weak economic incentives have made housing development too costly and uncertain.
The former 421a tax abatement helped make multifamily housing projects financially viable by offsetting some of New York’s high development costs.
Higher interest rates, rising construction costs, labor expenses, taxes, and insurance costs have weakened development economics.
It advocates for stronger tax incentives, faster approvals, streamlined regulations, and policies that allow private developers to build housing profitably.
Because New York already has the developers, labor force, capital, and infrastructure necessary to scale production if economic conditions improve.
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