The appetite for investing in New York City has rarely been higher. But as lending has fallen back, deliveries have continued and rents have flattened, a gulf between what buyers are willing to pay and what sellers are willing to take has formed.

“Those of us with capital to deploy aren’t doing anything,” Rockwood Capital partner David Streicher said at Bisnow’s NYC Multifamily Outlook event on Tuesday. “Sellers are looking at refinancing their properties because the pricing [they are looking for] is not out there.”

The city’s strong fundamentals have become a double-edged sword. Investors consistently target New York because its employment, population density and pricing are the best in the country.

Unemployment is down around 6% in a city of more than 8 million people. Queens came close to $2B in multifamily transactions last year. Most experts at the event agreed that the Bronx — not even a decade removed from being essentially a no-fly zone for new market-rate development — is investors’ best bet for a good return in the four major boroughs.

But because no one is predicting the city to lose its momentum anytime soon, there is no reason for the owner of a multifamily building or development to lower the asking price.

“The supply side is constrained, and will always be constrained,” Ariel Property Advisors president Shimon Shkury said. “If things are going to slow down, they’re just going to slow down. People are not going to sell, they’re going to wait it out if they can and sell a year down the road.”

The stalemate is not necessarily a negative for multifamily investors. Streicher said he does not expect many distressed properties to hit the market. Rather, it is a product of the current environment: Tens of thousands of units are under construction as builders scrambled to put shovels in the ground before 421-a expired. The rush of deliveries combined with a tighter lending environment has made buyers skittish about oversupply.

But since 421-a expired in 2016, construction starts on multifamily have fallen off dramatically. The effects of that dropoff will not be felt until a couple of years down the road, but it is the light at the end of the tunnel for landlords experiencing some pain. Rents fell by several percentage points citywide last year as the balance of power shifted from owners to tenants.

Rose Associates chief development officer James Hedden said he is seeing rent concessions anywhere from a free month for a 13-month lease to three free months for a two-year lease.

“It’s cheaper to keep your tenants, so you’re going to see aggressive negotiations for existing tenants,” he said. “They don’t really want to move, you don’t want them to move. If you can get a flat rate for your existing tenant, I think that’s a win. It’ll be moving sideways for the time being.”

What has the potential to break the stalemate? The lack of construction from 421-a will lead to more scarcity down the road, and the underwriting for assets may change. Once 421-a passes — which most panelists said they expect to happen this year — there could be another flood coming to market that alters the landscape once more.

"Once the current deliveries arrive, which will take two to four years to stabilize, there’s nothing being built behind it," Hodges Ward Elliot senior vice president Daniel Parker said. "It’s going to take a long time for that engine to start back up and deliver new product after what is currently planned, I think that’s an important point."