Cities Test Limits of SB 840 as Housing Debate Intensifies

A Texas law meant to fast-track apartment development is running into local resistance, limiting its impact across North Texas.

Opening the door: Senate Bill 840, which took effect last September, allows multifamily housing by right on commercially zoned land in Texas’ largest cities without public hearings or rezoning. The law was designed to ease the state's housing shortage and spur development on underutilized commercial sites.

Why it matters: Developers expected the law to accelerate apartment construction, mixed-use densification and office-to-residential conversions. Instead, many municipalities have adopted stricter design standards, infrastructure requirements and project mandates that industry leaders say effectively discourage development.

Winners and obstacles: Dallas has largely embraced the legislation, with city officials focusing on the law’s intent to increase housing supply. Plano has also seen strong interest, receiving 40 formal inquiries and reviewing three projects totaling 827 units. Developers have successfully pursued new opportunities in both cities.

Local pushback: Other cities have added requirements that developers argue undermine the law’s purpose. Examples cited include:

• Frisco requiring ground-floor retail.

• Arlington imposing six-story minimum building heights.

• Grand Prairie requiring Olympic-sized swimming pools.

• McKinney mandating extensive amenities and design standards.
  Industry participants say these provisions increase costs and make many projects financially unworkable.

Market backdrop: The debate comes amid slowing DFW multifamily construction. The region has experienced 11 consecutive quarters of declining construction activity and had just over 43,000 units under construction in the first quarter. Despite the slowdown, nearly 26,000 multifamily units were permitted in DFW last year, slightly above 2024 levels.

What's next: Texas lawmakers are already evaluating revisions to SB 840 ahead of the next legislative session in January. State Sen. Bryan Hughes, the bill’s primary author, signaled support for strengthening the law and limiting what he described as “costly and unnecessary mandates” imposed by local governments.

➥ THE TAKEAWAY

State vs. local: SB 840 was designed to accelerate housing development, but local regulations are limiting its impact in many North Texas cities. Whether the law delivers on its promise may depend on lawmakers' willingness to curb municipal barriers in the next legislative session.

➥ Houston industrial demand for 1M+ SF buildings is surging, pushing rents higher and accelerating new speculative development driven by strong tenant competition and rising capital inflows.

➥ DFW ranks No. 3 in the U.S. industrial market as tightening vacancy, shrinking supply, and strong investor demand drive rising activity and development across the region.

➥ Austin’s multifamily and office markets are stabilizing as strong population growth and improving absorption offset years of overbuilding, pointing to a gradual recovery despite elevated vacancy.

➥ Haven Housing acquired the 309-unit Hays Park apartments in Kyle, Texas, expanding its suburban Austin multifamily portfolio.

➥ Universal Kids Resort opened in North Texas with a new kid-focused theme park and hotel that could influence future entertainment real estate development.

➥ Auzmet Architectural is shutting down and laying off 150+ employees amid bankruptcy and ownership-related misconduct allegations.

➥ AT&T won approval to build a 280-foot Reunion Tower-inspired communications antenna on its Plano campus, reinforcing its HQ shift from downtown Dallas to the suburbs.

➥ A Dallas apartment sale tied to a future affordable housing redevelopment is moving forward after a deadly explosion destroyed the property and triggered a federal investigation.

➥ DFW will host the most 2026 World Cup matches and the largest broadcast center, driving major tourism and billions in regional economic impact.

➥ Neiman Marcus will close its historic downtown Dallas store, ending a 119-year presence and adding pressure to the city’s struggling retail core.

Texas’ GDP growth surged during the post-pandemic boom, significantly outpacing the nation, but has since cooled and returned to its historical trend of modestly outperforming U.S. economic growth.

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