HUD-funded research is putting hard numbers around a pressure point multifamily developers have felt for years: incremental changes to building codes are materially driving up construction costs and required rents, even as policymakers say they want more housing production.
According to a new study funded by the U.S. Department of Housing and Urban Development and conducted by researchers at Purdue University, building code revisions adopted between 2009 and 2021 increased the cost of constructing a typical multifamily apartment building by 9.9%. Those additional costs translate directly into higher break-even rents, with the study finding required increases for a two-bedroom apartment ranging from $134 per month in Charlotte, North Carolina, to $222 in Los Angeles.
On average, renters in the nation's largest cities would need to devote an additional 3.4 percentage points of their annual income to housing costs to cover the impact of these code changes, according to HUD.
For experienced apartment investors, the most striking finding is how concentrated the cost impacts are. Fire protection requirements alone accounted for roughly 67% of the estimated increases, while structural safety provisions represented another 20%. In other words, the bulk of the added expense is tied to life safety and resilience measures that cities and lenders increasingly view as non-negotiable.
The researchers note that while these changes raise development costs and required rents in the near term, they can also generate long-term savings by reducing disaster losses, lowering insurance premiums and improving building durability.
The two-year research project, funded by HUD's Office of Policy Development and Research, examined revisions to the International Building Code between 2009 and 2021 to better understand how code changes affect construction costs and housing affordability. The research team reviewed 130 code revisions adopted across four code cycles and determined that 36 increased development costs for multifamily housing. Of those, 16 directly affected the study's prototype: a three-story, 32,790-square-foot apartment building.
Using construction cost estimating software, the Purdue team then modeled how those code revisions play out on an actual building, allowing them to isolate which requirements move the needle the most on total project cost. The analysis confirmed that fire protection and safety-related requirements were the largest contributors to higher construction expenses, underscoring why developers often see the biggest jumps in line items tied to sprinklers, fireproofing, and structural systems.
The researchers also found that natural hazard mitigation represented the most common category of code revisions during the study period, while resilience and structural safety requirements were among those most likely to increase construction costs.
For investors active across multiple markets, an additional complication is the uneven way states and local jurisdictions adopt these codes. According to HUD's report, differences in state adoption can create inconsistencies in safety standards and limit the economies of scale that could otherwise help lower housing costs, since developers and contractors are forced to navigate a patchwork of requirements rather than a single unified framework.
All of this is playing out against an estimated national housing shortage of 4 million to 7 million homes, a gap that has policymakers, advocates and the private sector searching for ways to reduce barriers to multifamily housing production. HUD's findings suggest that code policy is a key lever in that conversation, with direct implications for how far development dollars can stretch in both high-cost coastal markets and fast-growing Sun Belt metros.
The final report has been completed and will be submitted to HUD and peer-reviewed academic journals, adding an empirical backbone to ongoing debates over the balance between safety, resilience, and affordability in apartment construction. For seasoned commercial real estate investors, the takeaway is clear: code evolution is not just a technical matter for architects and engineers; it is a material driver of project feasibility, rent levels, and long-term asset performance.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.