The following insights are informed by discussions with policymakers and industry leaders during recent meetings in Albany hosted by NAIOP, the National Commercial Real Estate Development Association.
New York State is increasingly acknowledging the need to modernize development policy to address the excessive time, cost, and uncertainty involved in bringing projects to fruition. Two proposals, Governor Hochul’s SEQRA reform under the FY 2026–2027 Executive Budget (Part R of the “Let Them Build” agenda) and the proposed S.9259 (Fahy) / A.10192 (Peoples-Stokes) Office-to-Residential Conversion Tax Credit, are being discussed in Albany. Together, these proposals signal a growing recognition that streamlining approvals and improving project feasibility are central to restoring confidence and investment in New York’s development landscape.
SEQRA Reform Could Finally Address Timeline Risk
For years, one of the biggest challenges in New York development hasn’t been design or demand. It’s actually been time.
Projects in New York are reported to take up to 56% longer to reach groundbreaking than in other states, driving up carrying costs and introducing uncertainty that can derail otherwise viable deals. The Governor’s proposed SEQRA reforms aim directly at that problem.
The proposal focuses on a few core changes:
- Defined timelines for environmental review
- Standardized processes across jurisdictions
- Fast-tracking for low-impact projects
- Modernized permitting systems
Individually, these may sound incremental. Collectively, they target one of the most persistent sources of friction in development: unpredictability.
If implemented, this could materially shorten pre-development cycles and give developers confidence in timing, which has long been in short supply.
That confidence has real implications. More predictable timelines reduce financing risk, improve underwriting accuracy, and make it easier to move projects forward without building in excessive contingencies.
Just as important, this isn’t about eliminating environmental oversight. It’s about making the process more consistent and navigable, especially for projects that meet clearly defined thresholds.
The Office Market Problem Is Becoming a Housing Opportunity
At the same time, the state is addressing another structural challenge: what to do with underutilized office space, particularly across Upstate markets.
Vacancy rates in cities like Albany, Buffalo, Rochester, and Syracuse are forcing a rethink of how downtown space gets used. The proposed office-to-residential conversion tax credit is designed to accelerate that shift.
The legislation introduces a 10% refundable tax credit on qualified rehabilitation costs for projects that meet specific criteria, including:
- Location in municipalities under one million residents
- Significant building vacancy
- Meaningful residential conversion thresholds
- Minimum size and structural retention requirements
These aren’t cosmetic renovations. Conversions are complex, expensive, and often difficult to justify financially due to building layouts, infrastructure limitations, and code requirements.
That’s exactly why the structure of this incentive matters.
A refundable credit directly reduces project costs in a way that can change the math. Deals that previously stalled at the feasibility stage may start to move. Buildings that sat idle may re-enter the market with a new purpose.
New York City has already demonstrated that this model can work at scale. The upstate proposal is a signal that the state sees adaptive reuse not as a niche strategy, but as a core part of solving its housing shortage.
What Developers Should Be Doing Now
While still uncertain if the legislation will pass, it is a good time to start thinking about the impact the legislation could have on stalled or planned projects.
Looking Ahead
While the two items discussed above are a move in the right direction if passed, there are many other hurdles to developing in New York State. Ultimately, without comprehensive reforms that address systemic delay, uncertainty, and cost escalation, New York State will continue to struggle to deliver the scale of development its economy and communities demand.
If you have any questions or are interested in learning more, we are here to help. Please do not hesitate to reach out to discuss your specific situation.
This material has been prepared for general, informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Should you require any such advice, please contact us directly. The information contained herein does not create, and your review or use of the information does not constitute, an accountant-client relationship.
