Tri-state capital migrates nationally amid regulation pressure - by Reese Weaver

New York tri-state multifamily investors are increasingly reallocating capital to less-regulated markets across the U.S. as rent control and legislative risk erode returns at home. With over 60% of New York City’s rental housing stock classified as rent-stabilized, the traditional value-add model — buying under-performing buildings, upgrading units, and raising rents — is now less viable. Investors face strict limits on rent increases, even after capital improvements, making it difficult to justify renovation costs.

The 2019 Housing Stability and Tenant Protection Act further curtailed landlord flexibility, limiting rent increases and vacancy bonuses. As a result, stabilized assets in New York City often trade at compressed cap rates with limited upside, while interest rates and operating costs have risen. Many institutional and mid-sized investors now view other United States markets as more attractive for capital deployment.

Nationwide, multifamily investment volume reached $28.8 billion in Q1 2025, up 33% year-over-year. New York tri-state firms contributed significantly to this growth, targeting markets in the Southeast, Midwest, Mountain West, and parts of the Mid-Atlantic — areas with no rent control and more favorable fundamentals.

With over $650 billion in multifamily debt maturing nationally by 2026, opportunities abound to recapitalize or acquire assets in growth markets where rents can adjust freely to reflect demand. The shift signals a long-term strategic pivot: New York tri-state investors are no longer just chasing yield — they’re avoiding regulation that caps upside and hinders reinvestment.

Reese Weaver is an associate in the national multifamily group of Besen Partners, Manhattan, N.Y.