Upzoning Literature Survey

Existing Studies on the Economic Impact of Upzoning on Local Business

Empirical Research

Existing empirical research on upzoning has focused primarily on housing outcomes—new construction, prices, and neighborhood demographic change—leaving the effects on commercial tenants and small businesses largely unexamined.

 Studies of zoning reform in New York, Chicago, Seattle, and other metros show that upzoning increases development capacity and, in many cases, multifamily construction, while raising land values and redevelopment probabilities on affected parcels. [1][2][3] However, these analyses typically treat existing commercial uses as part of an undifferentiated “prior land use” category, without tracking business closures, changes in commercial floor area, or shifts in tenant mix as distinct outcomes, and virtually never observe firm‑level trajectories or lease conditions before and after zoning changes. [1][2] 

As a result, the quantitative literature provides a clear picture of how upzoning restructures the built environment but offers little direct evidence on how those changes are experienced by incumbent businesses occupying commercial corridors targeted for new housing.

California

The gap is especially acute in the California context, where recent statewide laws (AB 2011, SB 6, and subsequent expansions) explicitly target strip‑commercial and office corridors for medium‑ to high‑density residential redevelopment. [4][5][6] Policy and industry analyses document that these laws can unlock substantial new housing capacity on commercially zoned parcels and introduce by‑right approval pathways for qualifying projects, radically changing the option value of underutilized retail sites. [7][8][9] 

Yet there is almost no empirical work linking these new entitlements to observable landlord behavior—such as increases in commercial rents, shortening of lease terms, or strategic non‑renewal of leases—nor to measurable risks of displacement for existing street‑level businesses that currently provide services and employment in these corridors. [10][11] In particular, the literature rarely distinguishes between “vertical” displacement (where businesses survive through relocation or re‑tenanting in new projects) and outright exit from the corridor.

Impact on Landlords

Qualitative and practice‑oriented studies on small business displacement in transit‑oriented and corridor reinvestment contexts suggest that upzoning and public investment can create po.rful incentives for commercial landlords to reposition properties, but these insights have not been integrated into the econometric upzoning literature. 

Work from the Small Business Anti‑Displacement Network and case studies along the Purple Line corridor, for example, document how rising land values and speculative interest after upzoning and transit announcements lead landlords to increase rents, decline to renew leases, and reposition spaces for higher‑end tenants, with significant impacts on immigrant‑ and minority‑owned firms. [10][11] 

Similar accounts from California corridors emphasize that new height and residential entitlements, combined with “objective” design standards and density bonuses, can encourage tear‑downs or major renovations that eliminate on‑site parking, replace shallow retail bays with residential lobbies or office amenity space, and disrupt business operations during multi‑year construction. [12][5] These studies, however, rely on case evidence and stakeholder interviews; they do not systematically link parcel‑level regulatory changes to panel data on rents, lease terms, or business survival.

Structuring Berkeley Planning data to enable these studies is a first, and almost costless positive step to better policy.

Berkeley Business Development

Anti‑displacement measures for small businesses—such as technical assistance, commercial rent stabilization pilots, acquisition of “legacy business” properties, and community land trusts—have received growing attention in planning practice and in policy‑oriented research, but they, too, remain analytically separate from the upzoning literature. 

Toolkits developed for transit and corridor projects describe a suite of interventions designed to mitigate construction impacts and rent shocks for small firms, including targeted grants, temporary relocation assistance, publicly backed tenant improvements, and shared parking or wayfinding strategies to preserve customer access during construction. [10][11][13] 

Yet there is little causal evidence on whether and how these measures alter the incidence of business displacement once zoning changes create strong redevelopment incentives on commercial land. 

Likewise, the interaction between state‑level entitlements (such as AB 2011’s residential rights in commercial zones) and local anti‑displacement strategies—where local governments still retain authority to impose objective standards, maintain some ground‑floor commercial requirements, or offer place‑based protections—has not been empirically evaluated. [4][14][6] 

But with the new State Assembly Special Committee to empirically examine the impact of AB2011 in each California city, Berkeley has a chance to be the first California city to establish an information-rich empirical testbed for actual legislative implementation, in partnership with the nation-leading UC-Berkeley Graduate School of Public Policy, UC-Berkeley Terner Center, UC-Berkeley College of Computing, Data Science, and Society  and other Urban research centers.

Impact of vague regulations on landlord and developer development decisions

Finally, there is almost no work that tests the specific hypothesis that *vague or flexible* upzoning regulations—those that significantly increase allowable height and residential use without tightly specifying ground‑floor requirements—alter commercial landlords’ profit calculus in ways that systematically change lease structures and occupancy risk for existing businesses. Current studies show that upzoning increases redevelopment probabilities and land values, which logically affects landlord expectations about alternative uses of their property, but they stop short of measuring intermediate behaviors like staged rent increases, shorter lease terms, introduction of demolition clauses, or the strategic withholding of maintenance to encourage tenant turnover. [1][2][3] 

The City of Berkeley can measure these behaviors. California needs it.

For California’s commercial corridors in particular, where state housing laws overlay pre‑existing local zoning that often still includes ground‑floor retail expectations and parking minimums, there is an urgent need for research that links parcel‑level regulatory change to business‑level outcomes using business license data, sales tax records, or private commercial leasing data. Such work would fill a critical gap between the macro story—upzoning as a tool for unlocking housing supply—and the micro‑level realities faced by incumbent businesses whose survival hinges on rent levels, lease security, parking access, and the precise ways that new housing entitlements are implemented on their block.

Sources

[1] [PDF] Zoning Change: Upzonings, Downzonings, and Their Impacts on ... https://yonahfreemark.com/wp-content/uploads/2023/04/Freemark-2023-Zoning-Change.pdf

[2] Zoning, Land Use, and the Reproduction of Urban Inequality - PMC https://pmc.ncbi.nlm.nih.gov/articles/PMC10691857/

[3] Making housing affordable? The local effects of relaxing land-use ... https://www.sciencedirect.com/science/article/pii/S0094119024000597

[4] [PDF] AB 2011 and SB 6 Summary of Key Details https://abag.ca.gov/sites/default/files/documents/2023-07/AB-2011-SB-6-Summary-Key-Details-7.28.2023.pdf

[5] [PDF] Developing Housing in Commercial Zones: AB 2011 & SB 6 https://www.apacalifornia.org/wp-content/uploads/2022/11/11-01-2022-AB-2011-and-SB-6-Webinar-FINAL-1.pdf

[6] California Legislature Allows Housing on Commercial Property https://www.rutan.com/california-legislature-allows-housing-development-on-commercial-property/

[7] Can commercial corridors solve California's housing crisis? https://urbanfootprint.com/blog/policy/ab2011-analysis/

[8] Residential Housing Is Now Allowed in All Commercial Zones https://ternercenter.berkeley.edu/research-and-policy/ab-2011-commercial-zones/

[9] 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/

[10] [PDF] Preventing Small Business Displacement in Six Neighborhoods ... https://purplelinecorridor.org/wp-content/uploads/2024/03/2023-SBAN_chapter-4_final-2.pdf

[11] A Case Study on Preventing Business Displacement - Inclusive Action https://inclusiveaction.org/blog/a-case-study-on-preventing-business-displacement/

[12] New upzoning and 'objective design' rules could lead to small ... https://48hills.org/2024/06/new-upzoning-and-objective-design-rules-could-lead-to-small-business-displacement/

[13] Infill Development: Balancing Growth, Transit, and Sustainability https://www.njtod.org/infill-development/

[14] [PDF] Los Angeles City Planning - City of Los Angeles https://planning.lacity.gov/odocument/efb2ba8c-6594-46e5-b48c-db468cdafd44/AB_2011_SB_6_Implementation_Memo.pdf