Zoning Reforms & Financial Gaps in Multiunit Development

By RadCRE Research · 2026-10-07 · Market Updates

A recent feasibility study for Oak Park's multiunit zoning changes indicates high rents and significant financial gaps [1].

Examining Feasibility in Multiunit Development Amidst Zoning Reform

Recent developments in Oak Park, Illinois, highlight the complex interplay between zoning reforms and the financial feasibility of new multiunit housing projects. The Village of Oak Park has been exploring changes to its single-family zoning to encourage what is termed “missing middle” housing. A financial feasibility study, conducted by SB Friedman, assessed the potential impacts and viability of these proposed changes [1].

The findings from this study present a mixed outlook. While the intent of the zoning reform is to facilitate increased housing options, the study predicted high rents for these new multiunit developments. Furthermore, it identified significant financial gaps, indicating that simply altering zoning regulations may not be sufficient to achieve affordability goals without additional financial support [1]. The study suggests that for these initiatives to be truly effective in creating affordable housing, they might require extra financial backing to bridge these gaps and mitigate the high costs projected for new units [1].

RadCRE Perspective

“The Oak Park study underscores a critical reality in commercial real estate development: zoning reforms alone often don't solve the full financial equation, especially when aiming for affordability. While loosening restrictions is a necessary first step, developers and municipalities must also address the inherent financial hurdles through creative capital structures or public-private partnerships. Identifying significant financial gaps, as seen in this study, necessitates a deeper dive into underwriting to ascertain true project viability and the potential need for subsidies or incentives to bridge those gaps, particularly in value-add or conversion plays where costs can escalate quickly.”

This situation in Oak Park illustrates the challenges faced by many municipalities attempting to address housing shortages and affordability through regulatory adjustments. While the desire to encourage multiunit housing by amending zoning is positive, the financial viability of such projects remains paramount for developers. Understanding these inherent financial gaps and the potential for high rents is crucial for any real estate investor or developer contemplating similar opportunities, emphasizing the need for comprehensive financial analysis beyond just regulatory changes.

Tags: zoning reform, multiunit development, affordable housing, financial feasibility, Oak Park