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Barriers to Apartment Construction Index

Apartment Construction Index

The National Apartment Association commissioned Hoyt Advisory Services, a subsidiary of the Homer Hoyt Institute (HHI), the nation’s leading real estate research foundation, to conduct research on natural barriers and policies that affect new apartment development. Using a 70-question survey and additional data sources, input was collected from both the public and private sectors. The resulting index and sub-indices provide a detailed and objective understanding of how land availability and use pertaining to multifamily housing differ across the country. The seven major factors identified and measured include: Community Involvement; Cost, Land & Infrastructure; Affordable Housing Requirements; Density/Growth Restrictions; Environmental Restrictions; Process; and Political Structure. The pilot survey was conducted for New York, Miami, Austin and San Diego, and will be rolled out to other markets throughout 2018.

The cost of construction, including land costs and fees, is the common factor impacting new development across all four markets. San Diego has the greatest number of restrictions with land availability, environmental restrictions, construction costs, and community involvement ranked as the most influential issues; the political structure of the area and the entitlement process also pose challenges according to survey respondents, creating uncertainty and delays.

New York City and the greater metro area cite similar influential factors – construction costs, land availability and affordable housing requirements, but differ in the entitlement process (less restrictive outside the city) and environmental restrictions (more of a barrier outside the city).  New York has the highest multifamily property tax rate in the country.

Typical for coastal markets, Miami’s major barrier to construction is land availability. Environmental restrictions also have an impact on new development, and construction costs are particularly affected by impact fees.

The high growth forecast for Austin through 2030 makes its construction policy issues particularly important.  Construction, land and labor costs have been rising, and impact fees add to those costs. Survey respondents cite environmental restrictions as costly and time-consuming in the process, although local residents value many of these initiatives that help make the area attractive to incoming residents.

The results of the survey can be used to help municipalities create best practices as well as assist in research to understand how land use impacts critical issues such as housing affordability, costs, and supply. 

Download the individual reports:

Austin

Miami

New York City

San Diego

For more information, including background and methodology, please contact Paula Munger, Director of Industry Research & Analysis.