Creative director Rasmus Hoejengaard said it wasn't to "cut corners or reuse assets", but to create a stronger emotional impact for both returning players and Americans.
"Actually the reason we wanted to do this was because when you know an area and feel at home in it, and you come back and see that it's completely not what you know it for, it's actually emotionally more powerful than if you come back to a location that you haven't seen before and see that it's overgrown," he told Digital Spy at an EA press event.
"A good example is if there's a war going on and your home city gets bombed, then that'll make a bigger impact on you if you return than if it's a city that you have never been in before.
"Because we wanted to take such a leap visually from Crysis 2 to Crysis 3, we thought doing this within the same setting would be more empowering than if we'd done it in a difference place. Which we could have done because it's not more work, it would have been the same thing."
Hoejengaard added: "Also New York obviously is such a known location, and because Americans feel strongly towards New York, seeing this thing happen to the NASDAQ or Empire State Building is going to resonate very strongly with a lot of people."
Announced last week, Crysis 3 sees Prophet discovering that the city has been encased in a 'Nanodome' by the Cell Corporation.
The dome has created a natural environment within the city, adding a rainforest, swamplands and rivers, as well as seven distinct locations named the Seven Wonders.
> Read our first-look preview of Crysis 3
Photo gallery - view screenshots of Crysis 3 below: