What are the affordable requirements within Midtown South Mixed-Use rezoning plan if building condominiums? - by Ron Cohen

Midtown South Mixed-Use Plan (MSMX) does NOT give a condo exemption. It triggers Mandatory Inclusionary Housing (MIH) exactly the same as rental unless you intentionally choose the “condo MIH” pathway (higher AMI/lower depth). The difference is in the options available, not the obligation. MSMX mapped new R11/R12 districts (15–18 FAR) and attached Mandatory Inclusionary Housing to every residential development and conversion. Therefore if you build residential floor area in MSMX you must provide permanently affordable housing.

MSMX effectively forces condo development on small lots unless you have a tax abatement, are doing a 467-m office conversion, or you’re operating in a much lower interest rate environment. Without those, rental pencil collapses at 15 FAR due to MIH depth.

From the zoning text and program rules, distribution requirements inside the building are such that:

• Units must be permanently income-restricted

• Must be physically integrated (no “poor door”)

• Must be proportionally distributed across unit types

• At least half must be family-sized (2BR+) in many Manhattan rezonings.

It has a quantifiable impact on sellable condo FAR. The typical underwriting rule in Manhattan rezonings is for every 1.0 residential FAR there’s only 0.70–0.75 sellable condo FAR after MIH economics. So for a 15 FAR building, the effective luxury FAR is really 10.5 to 11.25.

Bottom line: for a 15 FAR MSMX condominium building you should underwrite:

• ~25% of residential ZFA permanently affordable

• Target incomes roughly 80–130% AMI equivalent economics

• Integrated inside building or off-site

• No payment-in-lieu

• Retail/office does not dilute requirement

That is why MSMX land pricing behaves closer to ~11 FAR residential, not 15.

Ron Cohen is chief sales officer/associate broker, at Besen Partners, New York, N.Y.