No: While higher density buildings can add value to a real estate project, these buildings cost more to build – sometimes much more. Even if the added income of having more on-site units is more than the cost to build higher, increasing the allowable density may not automatically add enough value to offset the cost of providing affordable housing. Many voluntary inclusionary housing programs rely on an increased density incentive to encourage developers to build affordable units. But the track record of these programs suggests that increased density alone is not enough of an incentive.
A Grounded Solutions Network (formerly Cornerstone Partnership) study of the voluntary incentive zoning program in Seattle, Washington, found that more than half of eligible projects forewent the bonus density and built only to the base height.* Opponents of the program claimed that this was evidence that the housing requirements were overly burdensome. However, a subsequent study concluded that many projects would not have built to the higher density even if it were available with no affordable housing requirement* mostly because of the dramatic increase in construction costs for steel frame high-rise buildings. While the bonus density was valuable, it was not valuable enough to offset the added construction cost in many cases. The result of Seattle’s voluntary program was that extremely profitable mid-rise projects were not required to contribute to affordable housing, while their less profitable high-rise neighbors were.
