I live in East Village right on the border with the LES. There's certainly development happening and new buildings coming up but when I walk around EV/LES it sometimes feels like I see more 2-3 story buildings than otherwise. There's literally no reason any of these buildings should be under 6 stories minimum. People think of Manhattan as being dense with a bunch of skyscrapers but I suspect in reality there's still a whole lot of units that could be added by simply building upwards.

I say 6 stories because you can reasonably have a 6-story walkup. Anything higher and you would need to add an elevator which could make things harder.