From the NY Times:
The growth in high-end projects in Manhattan comes as housing for the working and middle class is in increasingly short supply in the city. These buildings are proving so profitable that they are warping the local real-estate market, making it more difficult to put up more-affordable housing.
Developers have long complained that the prices of land, construction materials and labor are high in New York, even if they are somewhat less expensive than in London or Hong Kong.
But builders of ultraluxury apartments have much more latitude on costs because they are securing spectacular prices for their projects.
As a result, the luxury building trend is driving up the overall cost of land in the city. Several developers maintained that they could build moderately priced housing only if they could get significant tax breaks.