Economic literature review

Literature Review: January 7, 2025

Upzoning in California—especially allowing taller housing in commercial zones—has clearly expanded potential housing capacity and streamlined approvals, but the measured impact on actual construction so far is modest and uneven, with large theoretical upside if implementation and economics line up. [1][2]

Key statewide reforms and commercial upzoning

• Since about 2017, California has passed over 100 laws changing planning, zoning, and permitting, including measures to override some local height/density limits, allow residential in commercial zones, and streamline approvals. [3]

• Since 2017, Berkeley has passed dozens of ordinances, modified dozens of others, and passed significant new ordinances.  In 2024 and 2025, many new changes were made, but not cataloged. 

• Recent laws like SB 6 (2022) and AB 2011 (2022), now expanded by AB 893 (2025) and AB 2243 (2025), allow multifamily or mixed-income housing “by right” on certain commercially zoned parcels, often along major corridors, subject to labor and affordability conditions. [4][5][6][7]

Evidence on upzoning and commercial corridors

• A Terner Center analysis found that only about 38,000 homes were built on commercially zoned land in California between 2014–2019 under pre‑AB 2011 rules, showing how little commercial land contributed to housing before these reforms. [2]

• An UrbanFootprint study of AB 2011 estimated that eligible strip‑commercial properties statewide could support 1.6–2.4 million market‑feasible new homes if zoning and permitting barriers are removed, including hundreds of thousands of income‑restricted units, but noted that realizing this depends on construction costs, labor capacity, and capital. [1]

• For a case study, UrbanFootprint’s earlier work on the Bay Area’s El Camino corridor suggested that converting low‑density commercial parcels to moderate‑density mixed use could yield around 250,000 additional units along that single corridor while reducing VMT and environmental impacts relative to greenfield development. [1]

So far, these analyses show large added capacity and feasibility on commercial corridors, but they mostly project future potential rather than document realized post‑reform construction.

Broader empirical literature on upzoning

• Freemark’s 2023 monograph on zoning change synthesizes evidence from multiple cities: targeted upzoning (allowing taller buildings in specific districts or near transit) tends to increase permitted capacity and sometimes new multifamily construction, but effects on prices and total output can be blunted by rising land values, market cycles, and other regulations. [8]

• A 2025 UCLA paper on the “zoning buffer” argues that only broad upzoning—allowing at least moderate density (roughly 6–10 units on 25–50% of parcels)—is likely to meaningfully improve affordability at metro scale; narrow upzones or small commercial overlays may increase land prices without very large production increases. [9]

• National and statewide reviews (e.g., NAHB, Mercatus‑cited studies) similarly find that restrictive zoning and added requirements (like strong inclusionary mandates) can significantly reduce market‑rate production, while relaxing those constraints tends to increase multifamily starts where demand is strong, though estimates vary. [10]

In short, the research consensus is that upzoning does increase capacity and can raise construction, but impact magnitudes depend heavily on how broad the upzone is, and on other cost drivers.

California upzoning vs. realized housing construction

• Despite the volume of state reforms, a recent Brookings analysis notes that statewide zoning changes have not yet produced large, observable dents in Southern California’s affordability crisis, in part because local implementation remains slow and other cost factors remain high. [3]

• Terner Center commentary on AB 2011 implementation in Bay Area housing elements finds that many jurisdictions acknowledge commercial‑zone housing as a strategy, but local barriers (parking, design standards, fees, uncertainty about labor/affordability requirements) may still limit near‑term project pipelines. [2]

• Legislative round‑ups from 2024–2025 emphasize that new bills (e.g., AB 893, AB 2243, SB 79) continue to push higher heights and densities along commercial and transit corridors, but note that it will take several RHNA cycles to see full construction effects in statewide production data. [5][11][6]

Thus, current evidence suggests incremental gains in entitlements and some new projects, but not yet the “millions of units” implied by theoretical capacity studies.

Commercial‑corridor height increases and local examples

• Many local corridor plans (e.g., Berkeley’s in‑progress Commercial Corridor Zoning Update for North Shattuck, College, and Solano) explicitly aim to raise height and intensity in commercial districts to augment housing capacity while avoiding direct upzoning of interior single‑family areas. [12]

• These corridor plans typically:

  • Increase allowed heights and FAR for mixed‑use housing on commercial streets.

  • Layer on form‑based standards, design review, and often still substantial development fees. [12][13]

The literature on similar corridor‑focused upzoning in other regions shows:

• More entitled units and land value increases in upzoned strips,

• Actual construction concentrated on the most valuable parcels and in stronger market cycles,

• Limited immediate displacement of existing housing (since commercial parcels often have little or no residential on site), which is a key political rationale. [1][8][9]

Overall assessment

Across the literature and early California experience:

• Upzoning commercial corridors and raising height limits creates large theoretical capacity and streamlines approvals, especially when paired with by‑right provisions like AB 2011. [1][4][5]

• Actual housing construction responses to date are positive but relatively small compared to need, constrained by construction costs, labor, financing, local implementation, and overlapping regulations. [3][2]

• Researchers increasingly argue that to materially change outcomes, California will likely need broad, not just corridor‑focused, upzoning, plus reforms to complementary constraints (fees, parking, timelines) so that the additional height and mixed‑use rights in commercial zones actually pencil out at scale. [9][10]

If you want, a next step could be a curated list of 5–10 specific empirical papers (with authors, years, methods, and main findings) suitable for citation in an academic article on California corridor upzoning.

Sources
[1] Can commercial corridors solve California's housing crisis? https://urbanfootprint.com/blog/policy/ab2011-analysis/
[2] Residential Housing Is Now Allowed in All Commercial Zones https://ternercenter.berkeley.edu/research-and-policy/ab-2011-commercial-zones/
[3] Statewide zoning reforms aren't making much of a dent in Southern ... https://www.brookings.edu/articles/statewide-zoning-reforms-arent-making-much-of-a-dent-in-southern-californias-housing-affordability-or-production-problems-at-least-not-yet/
[4] Two New Laws Authorize Multifamily Residential on Commercial ... https://www.meyersnave.com/two-new-laws-authorize-multifamily-residential-on-commercial-property/
[5] California Housing Supply and Land Use Legislative Round-Up 2025 https://ternercenter.berkeley.edu/blog/california-housing-supply-and-land-use-legislative-round-up-2025/
[6] AB 2243: Significant Expansion of SB 6 & AB 2011 https://bbklaw.com/resources/la-093024-ab-2243-significant-expansion-of-sb-6-ab-2011
[7] California Legislature Allows Housing Development on Commercial ... https://www.rutan.com/california-legislature-allows-housing-development-on-commercial-property/
[8] [PDF] Zoning Change: Upzonings, Downzonings, and Their Impacts on ... https://yonahfreemark.com/wp-content/uploads/2023/04/Freemark-2023-Zoning-Change.pdf
[9] Building Up the "Zoning Buffer": Using Broad Upzones to Increase ... https://www.lewis.ucla.edu/research/building-up-the-zoning-buffer-using-broad-upzones-to-increase-housing-capacity-without-increasing-land-values/
[10] How Zoning Regulations Affect Affordable Housing | NAHB https://www.nahb.org/blog/2024/11/zoning-regulation-and-affordable-housing
[11] California's 2026 Housing Laws: What You Need to Know | Insights https://www.hklaw.com/en/insights/publications/2025/12/californias-2026-housing-laws-what-you-need-to-know
[12] Corridors Zoning Update: North Shattuck, College, and Solano ... https://berkeleyca.gov/construction-development/land-use-development/general-plan-and-area-plans/corridors-zoning-update
[13] Research Zoning Permits and Zone Designations | City of Berkeley https://berkeleyca.gov/construction-development/land-use-development/research-zoning-permits-and-zone-designations
[14] Opinion: Zoning Reform Is Key to Solving the Housing Crisis—But ... https://davisvanguard.org/2025/08/state-local-housing-policy-clash/
[15] [PDF] new-housing-laws-will-allow-by-right-housing-in-commercial-zoning ... https://www.allenmatkins.com/a/web/7xyNCsG9biDwh9p7jEPeyb/new-housing-laws-will-allow-by-right-housing-in-commercial-zoning-districts-in-california_chasecaroline.pdf
[16] Single-Family Zoning Reform Highlights a Breakthrough in ... https://ternercenter.berkeley.edu/research-and-policy/single-family-zoning-reform-highlights-a-breakthrough-in-california-housing-policy/