The New York City borough of Queens is currently experiencing a shortage in the multi-family segment, as the rental market tightens amid a decline in new construction. This is according to current data from CoStar. However, local housing market experts expect this downturn will not last long, with a significant increase in housing projects anticipated in the coming years, particularly driven by new development plans.
In the second quarter of 2026, the vacancy rate in Queens' multi-family market fell to 2.08 percent, compared to 2.39 percent in the same quarter of 2025. The stabilised vacancy rate simultaneously reached an all-time low of 1.3 percent, which CoStar describes as “significantly below the metro average”. The pipeline of residential units under construction has shrunk by 76 percent since early 2024, from 10,881 units to just 2,597 in the second quarter of 2026. According to CoStar analysis, this represents the borough's smallest project pipeline in at least a decade.
Victor Rodriguez, Senior Director of Market Analytics at CoStar, commented on the situation as “a classic tale of supply and demand”. He explained that vacancies in Queens had risen in recent years due to intense construction activity. It took time for these new buildings to be leased, especially as thousands of units were added annually. Rodriguez emphasised that the demand side does not necessarily change when supply decreases, which has led to a significant reduction in the construction pipeline in Queens.
The slowdown in construction activity is attributable to several factors. These include the introduction of the city's 485-x initiative – a tax abatement programme intended to promote affordable housing construction, but which entails higher labour costs for projects exceeding 100 units. Another reason was that some developers awaited the adoption of the housing-friendly One LIC rezoning plan in Long Island City. Eric Benaim, Co-founder and CEO of the real estate group Modern Spaces, reported that many projects were paused to await developments regarding 485-x and One LIC. The uncertainty surrounding One LIC had kept many ventures on hold.
With the approval of One LIC last November, as well as other rezoning initiatives in Queens, such as the Jamaica Neighborhood Plan, Benaim expects a surge in construction activity. Since One LIC's approval, Modern Spaces has observed high developer activity. There is significant movement in land sales, ongoing projects, and new planning. Benaim forecasts enormous supply, with One LIC envisioning an increase of 15,000 units. He anticipates that at least 4,000 or 5,000 units will come onto the market within 30 to 36 months.
