Manhattan Entry-Level Condo Supply to Plummet 74% by 2029

The pipeline for new entry-level condominiums in Manhattan is projected to shrink by 74% through 2029 compared to the previous decade, according to a new report from Corcoran Sunshine Marketing Group. This significant decline is attributed to rising development costs, pushing builders to prioritize more expensive luxury properties.

Corcoran defines entry-level new condos as those priced below $1,800 per square foot. For apartments ranging from 500 to 1,000 square feet, this translates to a price range of up to $900,000 to $1.8 million. Despite this high threshold, even these more affordable units are becoming scarce.

In the coming years, only about 172 entry-level units are expected to enter the market in Core Manhattan between 2026 and 2029, averaging approximately 43 units annually. This contrasts sharply with the past decade, when an average of 165 such units became available each year.

Developers are increasingly concentrating on higher-priced segments. Nearly half of the approximately 5,900 new condos planned for Core Manhattan are expected to fall into the “mid-market” category, priced between $1,800 and $2,400 per square foot. Super-luxury supply, defined as $3,400 to $5,000 per square foot, is projected to increase by 88%, while ultra-luxury units exceeding $5,000 per square foot could see a surge of 285%, placing smaller units in the $1.7 million to $5 million range.

“The cost of doing business has gotten much higher across the board for developers,” said Kelly Kennedy Mack, president of Corcoran Sunshine. “Construction and especially labor costs have skyrocketed in recent years, and desirable development parcels are getting fewer and farther between and more expensive in the city.”

While Manhattan's overall condo pipeline appears stable on the surface, with about 1,473 new units expected annually from 2026-2029, this figure is buoyed by four large developments. Excluding these, the projected annual pipeline would be about 25% lower. Compared to the pre-pandemic building boom, which saw an average of roughly 1,745 new for-sale units annually between 2016 and 2020, the projected supply through 2029 is 16% lower.

The report also highlights a significant shift away from rental-to-condo conversions, which previously provided a substantial source of entry-level inventory. These conversions are expected to constitute only 4% of the pipeline in the coming years, down from about 20% before 2019. This is partly due to recent policy changes making such conversions more difficult and tax abatement programs that favor new rental developments.

Office-to-apartment conversions are also making a minimal contribution to the for-sale market, accounting for only 5% of the Core Manhattan pipeline, as available tax incentives are primarily for rental projects.

In contrast, the rental market is seeing substantial growth, with conversions making up a larger share. Approximately 71% of the projected rental pipeline in Core Manhattan consists of office-to-apartment conversions, totaling nearly 13,000 units. This trend means that while New York City is adding housing, an increasing proportion will be rentals rather than owner-occupied properties.

Across Manhattan and designated areas of Brooklyn and Queens, about 52,000 market-rate homes are anticipated by 2029. Of these, 77% are expected to be rentals, an increase from roughly 70% in the prior decade, while for-sale introductions are projected to decline by 11% overall.

The trend of shrinking for-sale inventory extends beyond Manhattan. In secondary markets like Upper Manhattan, Western Queens, and parts of Brooklyn, the for-sale pipeline through 2029 is projected to be 18% below the 10-year average. Central Brooklyn faces the most significant decline, with a projected 47% drop in annual introductions.

Western Queens, however, shows a slight increase, with annual for-sale introductions expected to rise by 5%. Geographically within Manhattan, the Upper East Side and Midtown are projected to see increases in condo introductions, while the Financial District and Battery Park City anticipate a sharp decline.

Furthermore, not all planned units are guaranteed to reach completion, as only 55% of the roughly 52,000 homes in the broader pipeline are currently under construction. The remaining 45% are still in the planning stages, with potential for delays due to financing, construction challenges, and market conditions.