Sustainability Atlas
Mobility & Built Environment·14 min read··...

Interview: the builder's playbook for Urban planning & low-carbon land use — hard-earned lessons

A practitioner conversation: what surprised them, what failed, and what they'd do differently. Focus on unit economics, adoption blockers, and what decision-makers should watch next.

Urban areas consume 78% of the world's energy and produce more than 70% of global CO₂ emissions, yet they cover just 3% of Earth's land surface. In North America, where 83% of the population lives in cities, the stakes are extraordinarily high: land use decisions made today will lock in emissions trajectories for 50-100 years. We spoke with urban planners, real estate developers, transit authorities, and climate-focused investors across the United States and Canada to understand what's actually working—and what hard lessons they've learned along the way.

The low-carbon urban development market reached $412 billion in North America in 2024, with transit-oriented development (TOD) alone attracting $89 billion in investment. But the real story lies in the gap between ambitious climate plans and on-the-ground execution. Here's what practitioners wish they had known before breaking ground.

Why It Matters

Transportation and buildings together account for 45% of US greenhouse gas emissions. Unlike power generation, where renewable deployment is rapidly decarbonising the grid, land use patterns are remarkably sticky: a highway interchange built today will shape commuting patterns for generations. The Intergovernmental Panel on Climate Change estimates that compact urban form could reduce urban energy use by 25-30% compared to sprawl, but only if development happens before car-dependent infrastructure becomes entrenched.

For investors, the financial case is increasingly compelling. Properties within a half-mile of transit command 10-25% rent premiums across major North American metros, according to 2024 data from the Urban Land Institute. Minneapolis's 2040 Plan, which eliminated single-family zoning citywide, saw a 12% increase in housing permits within two years while property values in newly upzoned areas rose 8% faster than the metro average.

The policy environment is shifting decisively. California's SB 423 (2023) streamlined approvals for multifamily housing near transit, cutting permitting timelines from 18 months to 90 days. Oregon's statewide middle housing mandate requires cities to allow duplexes, triplexes, and fourplexes in all residential zones. These regulatory tailwinds create asymmetric opportunities for developers and investors who understand the playbook—and significant risks for those caught flat-footed.

Key Concepts

Transit-Oriented Development (TOD)

TOD concentrates housing, retail, and employment within walking distance of high-quality transit stations—typically defined as a quarter-mile to half-mile radius. The model reduces vehicle miles travelled (VMT) by 40-60% compared to conventional suburban development while generating 2-4x higher property tax revenue per acre. Denver's Regional Transportation District has catalysed $15 billion in TOD investment since 2004, with projects averaging 45% lower parking ratios than suburban counterparts.

"The unit economics of TOD only work when you can actually reduce parking," explains a senior development director at a major REIT. "We're building at 0.5 spaces per unit in downtown Denver versus 1.8 in the suburbs. That's $30,000-50,000 in construction savings per unit, which makes the premium land costs pencil out."

Form-Based Codes

Unlike traditional Euclidean zoning that separates uses, form-based codes regulate building form—height, setbacks, facade treatments—while permitting mixed uses by right. Miami's Form-Based Code, adopted in 2009, is credited with enabling $10 billion in mixed-use development in the city's urban core. The approach removes discretionary approval processes that add 6-18 months to project timelines.

15-Minute City Framework

Popularised by Paris Mayor Anne Hidalgo, the 15-minute city concept ensures residents can access daily needs—work, shopping, healthcare, recreation—within a 15-minute walk or bike ride. Portland, Oregon operationalised this framework in its 2035 Comprehensive Plan, requiring that 90% of residents live in "complete neighbourhoods" with access to essential services. The approach reduces municipal infrastructure costs by concentrating investment in existing urbanised areas rather than extending services to greenfield sites.

Carbon-Conscious Land Use Accounting

Leading jurisdictions now require lifecycle carbon assessments for major developments. California's SB 375 mandates that metropolitan planning organisations demonstrate how regional plans will meet GHG reduction targets. The Bay Area's Plan Bay Area 2050 allocated 80% of housing growth to Priority Development Areas near transit, projecting 18% VMT reduction by 2050.

What's Working

Minneapolis Eliminates Single-Family Zoning

Minneapolis's 2040 Plan became the first major US city to eliminate single-family zoning citywide, permitting up to three units on any residential lot. By 2024, the city had seen a 23% increase in duplex and triplex construction permits compared to pre-reform averages, with the largest gains in previously exclusionary neighbourhoods. Average rents in newly constructed missing middle housing came in 15-20% below new apartment buildings, expanding housing options across income levels.

"What surprised us was how quickly developers adapted," notes a Minneapolis planning official. "We expected years of adjustment, but by year two, most builders had standardised triplex plans that pencil on standard 50-foot lots. The key was making the approval process ministerial—no discretionary review means no NIMBY interference."

Denver's RTD Corridor Development

Denver's FasTracks transit expansion, funded by a 0.4% regional sales tax, has generated $15 billion in development investment within a half-mile of new stations since 2004. The Union Station neighbourhood transformed from railyards to a 25,000-resident mixed-use district with $3 billion in private investment. Critical to success: joint development agreements that allowed the transit agency to capture land value appreciation and reinvest in system improvements.

The Regional Transportation District now generates $45 million annually from joint development leases and air rights sales—revenue that reduces farebox dependency and improves service frequency. Higher frequency, in turn, supports denser development in a virtuous cycle.

Vancouver's Rental-Only Zoning

Vancouver, British Columbia pioneered rental-only zoning districts that prohibit condominium development, addressing a chronic shortage of purpose-built rental housing. The city's Rental 100 program has delivered 9,200 secured rental units since 2012, with projects receiving density bonuses, expedited permitting, and development cost levy waivers worth $30,000-50,000 per unit.

"Rental-only zoning gave us certainty that condo flippers wouldn't outbid rental developers for scarce land," explains a Vancouver-based housing developer. "Combined with the density bonus, we can compete for sites we'd otherwise lose."

Sacramento's Climate Action Plan Implementation

Sacramento embedded climate targets directly into its 2035 General Plan, requiring that all new development achieve net-zero operational emissions by 2040. The city's Green Means Go program provides by-right approval for projects meeting aggressive sustainability criteria—a process that reduces entitlement timelines from 18 months to 6 months. Since implementation in 2021, 67% of new multifamily permits have qualified for expedited review.

What's Not Working

Permitting Bottlenecks Override Good Policy

Even where zoning allows density, municipal permitting capacity frequently cannot keep pace. Los Angeles reformed its accessory dwelling unit (ADU) ordinance in 2017, making permits by-right, but average approval times still exceeded 8 months in 2024 due to understaffed building departments. Developers report that "by-right" in practice means "by-right to wait in line."

"The zoning reform was necessary but not sufficient," observes a Southern California homebuilder. "We've had ADU plans sitting with the city for a year while demand sits unsatisfied. The policy is there; the bureaucratic capacity isn't."

Parking Minimums Persist Despite Reform Rhetoric

While 60 US cities eliminated residential parking minimums by 2024, regional shopping centers, employment hubs, and suburban municipalities largely retain 1960s-era requirements. The result: transit-adjacent sites still build 1.5-2.0 parking spaces per unit because of lender requirements tied to suburban comparables, negating much of the cost advantage of TOD locations.

"Parking is where our pro forma dies," notes a multifamily developer active in Houston. "The city eliminated minimums downtown, but our construction lender still underwrites to 1.25 spaces because that's what comps show. We need banks to update their models."

Community Opposition Delays Critical Projects

California's CEQA (California Environmental Quality Act) continues to enable project opponents to file litigation that adds 2-4 years to development timelines. A UC Berkeley study found that 80% of CEQA lawsuits target infill housing and transit projects—precisely the development types that reduce regional emissions. The state's SB 423 streamlining exempts qualifying projects from CEQA, but eligibility requirements exclude many sites.

Regional Coordination Failures

Metropolitan areas with fragmented governance struggle to align transit investment with land use decisions. The Washington, DC region operates under three state governments and 22 local jurisdictions, each with independent zoning authority. Despite billions in Metro investment, Arlington County captures transit-proximate development while adjacent Prince George's County—with identical station access—sees minimal investment due to misaligned zoning and school quality perceptions.

Infrastructure Funding Gaps

Federal infrastructure programs remain heavily tilted toward highway expansion over transit and complete streets. The 2021 Infrastructure Investment and Jobs Act allocated $66 billion to passenger rail over five years—compared to $350 billion for highways. Cities attempting low-carbon land use strategies find themselves competing for limited transit dollars while state DOTs automatically fund highway widenings that induce demand.

Key Players

Established Leaders

  • Brookfield Asset Management — $850 billion AUM with major transit-oriented portfolios in Toronto, New York, and Los Angeles. Manhattan West development above Penn Station anchors their North American TOD strategy.
  • Hines — Global developer with 20+ million square feet of LEED-certified urban infill projects. Pioneering modular construction for urban sites through Hines Modular platform.
  • AvalonBay Communities — REIT with 80,000+ apartment units concentrated in transit-rich submarkets. 65% of portfolio within half-mile of transit.
  • Sidewalk Labs (Alphabet) — Urban technology subsidiary developing digital infrastructure for smart cities. Quayside Toronto project demonstrated integrated mobility and carbon tracking.

Emerging Startups

  • Culdesac — Building car-free neighbourhoods in Sunbelt cities. First development (Tempe, Arizona) opened 2023 with zero parking, integrated mobility subscriptions.
  • Cityzenith — Digital twin platform for urban carbon tracking. Used by Las Vegas, Orlando, and Phoenix for climate action plan monitoring.
  • Replica — Mobility data platform providing VMT analytics for regional planning. Acquired by Sidewalk Infrastructure Partners in 2022.
  • Katerra — Despite 2021 bankruptcy, successor entities continue modular urban construction. Factory-built components reduce urban site disruption.
  • Welcome Homes — AI-powered single-family home development platform expanding into missing middle housing. $90 million Series B in 2024.

Key Investors & Funders

  • US Department of Transportation — Reconnecting Communities Program provides $3.3 billion for highway removals and urban repair through 2026.
  • California Strategic Growth Council — Administers Affordable Housing and Sustainable Communities (AHSC) program—$785 million annually for TOD.
  • Fifth Wall — $3.2 billion proptech venture fund with dedicated climate strategy. Investments in construction tech, building decarbonisation, and urban mobility.
  • Urban Land Institute — Research and convening organisation shaping TOD best practices. Annual Impact Awards recognise exemplary projects.
  • Bloomberg Philanthropies — American Cities Climate Challenge provided technical assistance to 25 cities for climate action plan implementation.

Action Checklist

  1. Map entitlement risk by jurisdiction: Conduct due diligence on permitting timelines, CEQA/NEPA exposure, and community opposition history before site acquisition. Factor 12-24 month entitlement buffers for infill sites.

  2. Target parking-flexible submarkets: Prioritise cities that have eliminated or reduced parking minimums and lenders willing to underwrite at 0.5-0.75 spaces per unit. Denver, Minneapolis, Portland, and Seattle lead on both dimensions.

  3. Model infrastructure value capture: Assess special assessment districts, tax increment financing, and joint development revenue potential. Denver RTD's $45 million annual joint development income demonstrates the upside.

  4. Engage early with transit agencies: Establish relationships with FTA-funded transit operators before sites come to market. Air rights and joint development opportunities rarely reach open listing.

  5. Secure pre-development capital for entitlement risk: Allocate 8-12% of project budget to entitlement and predevelopment costs. Projects that control land through entitlement unlock significant promote carry.

  6. Track state preemption trends: Monitor California, Oregon, Washington, and other states expanding housing by-right. State-level reform can overnight create new investable submarkets.

  7. Build modular and prefab supply chain relationships: Urban sites with constrained staging benefit from factory-built components. Lead times for modular providers extended to 9-12 months in 2024—early contracting is essential.

  8. Integrate carbon accounting into underwriting: GRESB and other ESG frameworks increasingly weight Scope 3 emissions including tenant transportation. Properties with documented VMT reductions command institutional premium.

FAQ

Q: What returns should investors expect from transit-oriented development versus conventional suburban multifamily? A: TOD projects in major North American metros have delivered 150-250 basis points of IRR premium over suburban comparables when accounting for faster lease-up, lower turnover, and rental appreciation tied to transit access. A 2024 CBRE analysis found that multifamily within a quarter-mile of heavy rail stations in the 50 largest US metros achieved 5.2% rent growth annually versus 3.8% for suburban garden-style product. The key variable is parking: projects that achieve 0.5 spaces per unit see 20-25% construction cost savings that flow directly to returns. However, entitlement risk is higher for infill—budget for longer predevelopment periods and increased soft costs.

Q: How do we evaluate municipal commitment to low-carbon land use reform? A: Look beyond zoning text to implementation metrics: housing permits per capita, average permitting timelines, and staff capacity in planning departments. Cities with dedicated by-right approval tracks, form-based codes, and documented permitting under 90 days signal genuine reform. Warning signs include discretionary design review requirements, parking minimums retained for "special districts," and CEQA-equivalent state environmental review without project exemptions. The strongest signals are cities that have upzoned near transit, eliminated parking minimums, and staffed permit processing to match new capacity.

Q: What federal policy changes would most accelerate low-carbon urban development? A: Three interventions would materially shift the landscape: (1) conditioning federal transportation dollars on regional VMT reduction targets, which would force MPOs to align highway investment with transit and land use; (2) expanding the Low-Income Housing Tax Credit (LIHTC) with a location efficiency bonus for projects near transit, which would redirect affordable housing investment to transit-rich sites; and (3) creating a federal Tax Increment Financing program for transit station areas, similar to EU structural funds that enable value capture for infrastructure investment. The Biden administration's Reconnecting Communities Program represents a first step, but at $3.3 billion over five years, it's an order of magnitude below the need.

Q: How should we think about climate risk in low-carbon urban investments? A: Paradoxically, low-carbon urban locations often face elevated physical climate risk—coastal transit hubs, urban heat islands, and stormwater infrastructure designed for historical precipitation patterns. Integrate climate risk screening into site selection using tools like First Street Foundation's flood and heat ratings or Jupiter Intelligence's commercial platform. Target properties where municipalities have invested in resilience infrastructure: New York's post-Sandy investments, Miami Beach's stormwater upgrades, and San Francisco's seismic retrofit requirements. The 2024 GRESB assessment now includes physical risk disclosure, creating institutional pressure for portfolio-level climate resilience.

Q: When will autonomous vehicles disrupt transit-oriented development models? A: The timeline has extended considerably from 2010s projections. Waymo operates robotaxis in Phoenix, San Francisco, and Los Angeles, but deployments remain geofenced to low-complexity environments. Full L4/L5 autonomy in dense urban cores—where TOD concentrates—remains 10-15+ years away based on current regulatory and technical trajectories. More importantly, autonomous vehicles are unlikely to eliminate the congestion and land consumption disadvantages of car-based mobility: autonomous or not, a vehicle carrying 1.1 passengers occupies the same road space. The smart money is betting that AVs complement rather than replace transit, with first/last-mile autonomous shuttles feeding high-capacity rail and bus rapid transit.

Sources

The urban planning decisions of the next decade will determine whether North America's cities become engines of decarbonisation or remain locked into high-emission sprawl patterns. For investors, the playbook is increasingly clear: target jurisdictions with genuine regulatory reform, prioritise transit-proximate sites where parking reductions unlock unit economics, and build relationships with transit agencies before opportunities become competitive. The practitioners we spoke with emphasise that execution—not just policy intent—separates successful projects from those mired in entitlement delays. Those who master the operational details of low-carbon urban development will capture outsize returns as climate policy and demographic preferences converge on compact, connected communities.

Topics

urbanplanningcapexbuilding codestransitcompliancepermitting

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