Multifamily Barriers to Construction: ULI
- Mar 16, 2021
“What are the most significant issues impacting multifamily development today?” asked Paige Mueller, managing director at Eigen10 Advisors LLC, to the virtual audience at one of Urban Land Institute’s Housing Opportunity Conference panels, taking place from March 16-17. Along with Paula Munger, associate vice president of Industry Research & Analysis at National Apartment Association, Mueller analyzed a recent NAA index ranking and survey that provides data to identify differences in land management, construction and factors that impact housing availability and affordability.
The index survey featured 91 questions and included five external data sources totaling 753 responses. The results showed widespread agreement on the significance of local councils and community involvement when it came to issues disrupting construction. One-third of respondents indicated construction costs have increased more than 20 percent over the past five years. In addition, land and permit costs comprise 35 percent of total building costs.
Nearly half of private sector responses rate apartment development approval fairly to extremely difficult. While public and non-profit sectors fairly evenly split with a slight edge towards difficult. Communities usually use height, density, environmental and flood zone restrictions to guide growth. Additionally, infrastructure and traffic issue also play a large part in regulating the rate of development. The following are examples of other influential barriers:
- Community involvement: NIMBYism and required community meetings
- Cost: construction and land cost increase, land percentage total cost, impact fee waiver available
- Affordable housing density bonus
- Environmental restrictions: mitigation, open space requirements
- Time: increase approval time for less or more than 50 units
- Political Structure Complexity: local council and resident influence, needs rezoning
The survey also shared some of the least restrictive to most restrictive markets based on the results. Among the least restrictive include Albuquerque, N.M.; Dayton, Ohio; Eugene, Ore.; Dallas; Chicago and Indianapolis. The most restrictive included Boston; Salt Lake City; New York City and San Diego.
“Even if you follow this criteria, you might still not get things passed through. You might need to advocate to get you through the approval process,” said Munger.