The Battle Over By-Right Housing in Virginia’s Commercial Corridors

Earlier this month, the Virginia Senate narrowly defeated legislation that would have required localities across the Commonwealth to allow multifamily housing by right in large portions of commercially zoned land. The bill, House Bill 816, passed the House of Delegates but ultimately failed in the Senate on a 17–22 vote.

At first glance, the legislation appears to be a technical zoning reform. In reality, the bill was an attempt to address Virginia’s housing shortage by changing where apartments are legally allowed to be built.

The debate over by-right housing in commercial zones reflects a deeper shift in how states are confronting housing shortages, how local governments exercise control over development, and how American commercial corridors are evolving in a post-retail economy.

What the Legislation Would Have Done

House Bill 816, along with its companion Senate Bill 454, would have required local zoning ordinances to permit multifamily residential development and mixed-use projects on a significant portion of commercially zoned land. In its original form, the legislation required these uses to be permitted on at least 75 percent of commercial land. Amendments later reduced that threshold to 50 percent.

The key element of the bill was the concept of by-right development.

Under traditional zoning systems, many multifamily housing proposals require discretionary approvals such as special use permits, rezonings, or conditional approvals. These processes typically involve public hearings, planning commission recommendations, and final decisions by elected officials. (Read, lots of time, money, and political will.)

By-right development works differently. If a proposed project complies with the zoning ordinance, the locality must approve it administratively. The project still goes through site-plan review and technical evaluation, but it does not require political approval.

The legislation would have required localities to approve multifamily housing in designated commercial areas through this administrative process rather than through discretionary review.

The bill also included provisions limiting how local governments could regulate these developments. Local zoning ordinances could not require more than one parking space per residential unit, impose setbacks larger than those already required elsewhere in the locality, or mandate costly design features beyond what would normally apply to multifamily buildings. Height restrictions were also constrained. Local governments could not require a lower height than the tallest building within 500 feet or the height otherwise allowed under existing zoning rules.

Importantly, the legislation did not eliminate all development oversight. Projects would still need to comply with environmental regulations, historic district review requirements, and standard site-plan and subdivision rules. Several categories of land were also excluded from the mandate, including areas without water and sewer infrastructure, locations near military installations, heavily wooded areas, and industrial zones.

In practical terms, the bill would have done one thing: legalize apartments across large portions of land that today allow offices, retail centers, and even single-family homes.

Why Supporters Say the Reform Is Necessary

Supporters of the legislation framed it as a response to Virginia’s growing housing affordability challenges.

One of the central arguments behind the bill is that Virginia’s zoning system severely limits where apartments can be built. Housing researchers involved in the legislative debate noted that only about 5 percent of residential land in Virginia currently allows apartment development.

When so little land permits multifamily housing, development becomes concentrated in a small number of locations. That drives up land costs, slows housing production, and increases rents.

Allowing apartments in commercial corridors could dramatically expand the amount of land available for housing.

Commercial zoning districts often include aging shopping centers, underutilized office buildings, and large parking lots built for a retail economy that is rapidly changing. E-commerce has reduced demand for traditional retail space, while hybrid work has reshaped office demand. Many suburban commercial corridors are now overparked, underused, and economically stagnant.

Housing offers a new economic use for this land.

Instead of remaining low-density commercial districts, these corridors could gradually evolve into mixed-use neighborhoods with apartments above shops, residential buildings near transit corridors, and new populations supporting local businesses.

Supporters also point to research showing that adding new housing supply can moderate rent growth across the market. New housing often attracts higher-income renters into new buildings, freeing up older units at lower price points. Economists refer to this process as housing “filtering.” From this perspective, allowing apartments in commercial zones is a strategy to increase the overall housing supply and stabilize housing costs.

Why Local Governments Opposed It

Despite support from housing advocates and business organizations, the legislation faced strong opposition from many local governments.

The central concern was the loss of local control.

Local zoning systems frequently rely on discretionary approvals to negotiate development conditions. When a developer requests additional density or a rezoning, local governments often require proffers such as affordable housing contributions, infrastructure improvements, transportation upgrades, or school funding.

By-right development reduces that negotiating leverage.

Because projects that comply with the zoning ordinance must be approved administratively, local governments cannot require additional concessions in exchange for approval. Critics of the bill argued that the legislation effectively imposed a statewide upzoning mandate while removing the tools local governments use to manage growth and mitigate impacts.

Local government representatives warned that removing discretionary approvals could limit their ability to address infrastructure capacity, school enrollment pressures, and neighborhood compatibility concerns. For many municipalities, zoning authority is one of the most important tools they possess for shaping development patterns.

The legislation challenged that authority, and ultimately proved too much of a hurdle to overcome.

A Policy Shift Already Happening Elsewhere

Virginia’s debate over by-right housing in commercial zones is part of a broader shift in housing policy that is unfolding across the United States. For decades, land-use regulation in the United States has been dominated by local governments. Cities and counties determined where housing could be built and what forms it could take.

Now, state governments are increasingly intervening in local zoning systems when they conclude that those systems are not producing enough housing.

One of the most notable examples comes from Florida.

In 2023, Florida enacted the Live Local Act, legislation that preempts certain local zoning, density, and height restrictions for qualifying multifamily and mixed-use housing developments that meet affordability requirements. The law effectively allows affordable housing projects to move forward in areas where local zoning might otherwise prohibit them. Florida lawmakers have since gone further, adding legislation that has allowed residential development on qualifying infill parcels and brownfield sites in major urban counties, bypassing some local zoning restrictions when projects meet certain criteria.

These policies operate differently from Virginia’s proposal. Virginia’s HB 816 would have broadly legalized multifamily housing across large shares of commercially zoned land statewide. Florida’s approach is more targeted, focusing on affordable housing projects and specific redevelopment sites, but the underlying logic is the same.

When state governments conclude that local zoning systems are limiting housing supply, they increasingly intervene.

What Happens Next

Although Virginia’s legislation failed this year, the pressures that produced it remain.

Housing costs continue to rise in many parts of the Commonwealth, particularly in fast-growing metropolitan areas such as Northern Virginia and Hampton Roads. At the same time, many commercial corridors are struggling to adapt to structural economic change. Retail vacancies, declining office demand, and changing consumer behavior are leaving large areas of commercially zoned land underutilized. Future legislative proposals may take a more incremental approach.

Instead of applying statewide mandates across all commercial zones, lawmakers could focus on specific types of locations, such as transit corridors or major employment centers. Some proposals could tie zoning reform to affordable housing production or provide state incentives for localities that adopt pro-housing policies.

As commercial property owners seek new uses for underperforming retail centers and office parks, pressure will continue to grow for residential redevelopment. Over time, many local governments may decide on their own to allow more housing in these areas.

The Larger Question for Virginia

The debate over by-right housing in commercial corridors ultimately reflects a larger question about how Virginia will respond to changing economic conditions. The state’s zoning framework was largely designed during a period when suburban retail expansion and office growth defined development patterns.

Retail footprints are shrinking. Office demand is evolving. Housing shortages are becoming more severe. Commercial corridors that once served as centers of retail activity are increasingly becoming candidates for redevelopment. The policy question is whether zoning systems should evolve to reflect that reality.

Virginia’s legislation failed this year, but the direction of housing policy across the country is becoming clearer. States are increasingly willing to override local zoning controls when they conclude that those systems are not producing enough housing.

Florida has already taken that step. The question for Virginia is what version of it the Commonwealth will eventually accept to allow for more housing to be built.