Texas Multifamily Law Stalls Amid Local Resistance

According to Bisnow, Texas’ effort to accelerate multifamily development through Senate Bill 840 has produced mixed results across North Texas. The law took effect in September 2025. It allows multifamily housing by right in commercially zoned districts across the state’s largest cities and removes many traditional zoning hurdles.

Developers initially viewed the legislation as a catalyst for new apartment construction. Many also saw opportunities to densify mixed-use projects and convert offices into housing. Instead, many municipalities introduced new development requirements. Developers say those rules make projects harder to finance and have limited the law’s impact as Texas continues to face housing affordability challenges.

A Housing Supply Solution Meets Local Pushback

State lawmakers passed SB 840 to address Texas’ growing housing shortage by expanding opportunities for multifamily development. The legislation applies to cities with populations above 150,000 in counties with more than 300,000 residents. That includes many of the state’s largest growth markets.

The law removes public hearings and rezoning requirements for qualifying apartment projects in commercial districts. Supporters expected developers to quickly pursue new housing opportunities on underutilized retail sites, aging commercial properties, and mixed-use developments.

Developers say many local governments have retained significant control. They point to stricter design standards, infrastructure requirements, and project conditions that raise costs. Industry participants say these measures have slowed projects. The impact has been most noticeable in parts of Dallas-Fort Worth, where multifamily development has long faced opposition.

The Details

The uneven implementation of SB 840 is most visible across North Texas. Dosch Marshall Real Estate says some cities have embraced the law. Others have added requirements that limit its use.

Dallas has largely aligned with the legislation’s housing goals. City officials say Dallas was already structured to accommodate multifamily development in many commercial districts. The city continues to apply the law with an emphasis on increasing housing supply.

Plano has also seen measurable activity. City officials reported receiving 40 formal inquiries tied to SB 840. The city currently has three projects totaling 827 units under review. In April, Rosewood Property Co. revised plans for 45 acres at Heritage Creekside. The company replaced a planned office building with additional residential units.

Other municipalities have taken a different approach. Developers cite requirements such as ground-floor retail, minimum building heights, and extensive amenity packages. They say those rules can undermine project economics.

DFW Multifamily Activity Continues to Slow

The debate over SB 840 comes as Dallas-Fort Worth works through a broader multifamily slowdown. According to Colliers’ latest DFW multifamily report, construction activity has declined for 11 consecutive quarters. The market continues to absorb a wave of new supply delivered over the past several years.

The region still had more than 43,000 units under construction during Q1. Colliers expects that figure to continue falling. Permit activity has remained relatively stable. According to the National Association of Home Builders, nearly 26,000 multifamily units were permitted across DFW in 2025. That figure was slightly above 2024 levels.

That backdrop makes SB 840 particularly important for developers searching for lower-cost development opportunities. The law was designed to unlock commercially zoned sites that previously faced lengthy entitlement processes. Markets that have implemented the legislation with fewer restrictions appear to be generating more developer interest than those that have added additional requirements.

Why It Matters

The early performance of SB 840 highlights a recurring challenge in housing policy. Statewide reforms can only go so far when local governments retain significant influence over project execution.

For developers, the law promised a faster path to housing production in one of the nation’s fastest-growing states. The ability to build apartments by right in commercial districts created opportunities to repurpose underperforming properties. It also opened the door for higher-density mixed-use projects and office-to-residential conversions.

Early results suggest regulatory friction remains a major obstacle. Developers argue that enhanced design standards and amenity mandates add costs. Those expenses can undermine project feasibility, especially while construction and financing costs remain elevated.

If municipalities continue restricting projects through local regulations, lawmakers may pursue stronger preemption measures.

What’s Next

Attention is now shifting to the Texas Legislature’s next session, which begins in January 2027. Both chambers have launched reviews of SB 840. Committees are gathering feedback from developers, local governments, and housing advocates.

The Senate Local Government Committee has been tasked with evaluating the law’s effectiveness. It will also recommend ways to strengthen property rights and support housing affordability goals. The House Land and Resource Management Committee is conducting a similar review.

Supporters of the legislation, including its author, Sen. Bryan Hughes, have already signaled interest in tightening the law. They want to prevent what they view as excessive local requirements. Any amendments could determine whether SB 840 becomes a meaningful housing tool. They could also decide how much authority municipalities retain over implementation. For multifamily developers across Texas, the next legislative session may prove just as important as the original bill itself.