Why Developers Build 3-4 Story Apartments When the Code Allows More

If you've driven through San Diego's mid-density neighborhoods — North Park, City Heights, Linda Vista, parts of Hillcrest — you've probably noticed something curious. New apartment buildings are mostly three or four stories, even on parcels where the zoning allows six, seven, or more. Why?

The simple answer: on most infill lots, three or four stories is where the math actually works. The harder answer is that going from four stories to five triggers a cascade of cost increases that often eliminate the project's feasibility entirely.

Type V construction is the most economical, but caps at four stories

The California Building Code groups construction methods into types based on materials and fire resistance. Type V — wood-frame, the construction method that has built most of California's apartments for the past century — is by far the cheapest per square foot. It's familiar to local labor, uses standard materials, and lends itself to the unit sizes typical in multifamily projects.

But Type V has a structural ceiling. It's limited to four stories above grade in most residential occupancies. To go higher, you have to switch to Type III (wood frame with non-combustible exterior walls) or Type I (concrete and steel). Each step up the type hierarchy adds roughly 15-25% to construction costs per square foot, and the cost difference compounds with the additional floor.

For a typical infill apartment project, the construction cost difference between four stories of Type V and five stories of Type III can be the difference between a feasible project and a project that pencils as a loss.

The elevator threshold

A four-story building doesn't legally require an elevator. A five-story building does.

That's not just the cost of the elevator equipment itself — though that's significant, typically running $150,000 to $250,000 for the cab and shaft on a project this size. The elevator also consumes floor plate. A typical elevator core, with its associated lobby and service spaces, takes roughly 200-400 square feet on every floor. Multiplied across five or more stories, that's 1,000-2,000 square feet of building that's not generating rent.

Floor plate efficiency drops with the elevator added. Where a four-story walk-up might run at 85% efficiency (the share of gross floor area that's actually rentable), a building with an elevator core often drops to 80% or lower. Lost rentable area is lost forever — not just during construction, but for the entire life of the building.

The accessibility cascade

Here's where it gets interesting, and where most non-architects miss the real cost.

When a residential building includes an elevator, every dwelling unit in the building must be adaptable per California Building Code Chapter 11A. The same applies under federal Fair Housing Act regulations enforced by HUD.

In a four-story walk-up without an elevator, only the ground-floor units must be adaptable. The upper floors — typically the majority of the building — can be designed without those constraints. Add an elevator, and suddenly every unit on every floor must accommodate the same adaptability standards: turning radii in kitchens and bathrooms, reinforced walls for future grab bars, accessible routes through every space.

Adaptability isn't bad design. It's good design. But it requires more generous floor plans, and on a 500 square foot studio or a 650 square foot one-bedroom, those generous dimensions reduce the layout efficiency that makes small units rent well in the first place. The same number of square feet has to do more work.

What this means for what gets built

So when zoning allows seven stories on a parcel, the developer's actual feasibility analysis often looks like this: at four stories, the project pencils with Type V construction, no elevator, and only ground-floor accessibility. At five stories, the project takes on Type III construction costs, elevator equipment and shaft, reduced floor plate efficiency, and full-building adaptability. At seven stories, add Type I construction costs and seismic considerations on top of all that.

In a market where construction costs, interest rates, and rents are all under pressure, that math tends to land at four stories — even when the regulatory ceiling is much higher.

This is one of the reasons feasibility analysis is more than a regulatory question. The code tells you what's allowed; economics tells you what gets built.