Rising Interest Rates, Tariffs May Benefit Older NYC Buildings

October 7, 2026 - 21:49

Rising interest rates and new tariffs are reshaping New York City's real estate market, and the shift may favor older buildings over new development. The combination of higher borrowing costs and expensive imported materials has made it harder to finance and build the kind of amenity-heavy, top-tier properties that have dominated the market in recent years.

A real estate leader at Hogan Lovells recently told Law360 that this slowdown in new supply could work in favor of the city's existing older properties. With fewer Class A projects moving forward, demand for space in established buildings may hold steadier than expected. Tenants still need offices, retail space, and housing, and when new construction stalls, the existing stock becomes more valuable by default.

The dynamic is a reversal of the past decade, when a steady stream of new development pressured older landlords to renovate or risk losing tenants. Now, with the pipeline thinning, those same landlords may find themselves with more leverage. The cost of materials, from steel to finishes, has climbed sharply due to tariffs, and financing costs remain elevated. Together, these forces make ground-up development less attractive, at least in the near term.

For owners of older properties, the moment offers a chance to stabilize rents and reconsider renovation plans. The market may not be booming, but the competition from shiny new towers is easing.