The Permit Shortcut That’s Rebooting Affordable Housing Development

• Fast track to affordability: Los Angeles’s new fast-track permitting program has dramatically increased affordable housing approvals.

• Blood from a turnip: A recent bankruptcy court ruling could weaken landlords’ claims in bankruptcy and reshape how they approach distressed tenants.

• Nordic green nudge: Norway’s $2 trillion sovereign wealth fund is tying office investments more closely to renewable energy as it seeks stronger long-term returns.

• Smart building trends webinar: Smart buildings are evolving as AI and connected systems redefine how properties think, adapt, and perform. Sign up

Multifamily

The Permit Shortcut That’s Rebooting Affordable Housing Development

When Los Angeles launched its Executive Directive 1 (ED1) in December 2022, few could have predicted how quickly it would shake up the city’s affordable housing engine. By cutting the approval timeline for 100-percent affordable housing from roughly a year to just 60 days, skipping public hearings and City Council votes for qualifying projects. The policy unleashed a flood of new proposals. In the two years since ED1 began, developers have submitted plans for more than 42,300 affordable units, and about 75 percent—roughly 31,700—are already approved. That’s more than double the total from the prior three years.

What’s remarkable is not just the volume, but who’s building. ED1 has drawn in not only nonprofit affordable-housing specialists but private, market-rate developers who previously wouldn’t touch deeply subsidized projects. The streamlined permits effectively change the underwriting math. With entitlements de-risked and timing substantially shortened, affordable developments are no longer the back-burner, faith-driven plays they once were. Instead, they’ve become viable—even attractive—for real estate firms willing to weight their social mission alongside their financial returns.

Los Angeles is hardly alone in using fast-track permitting to accelerate affordable development. In Nashville, a similar policy established in 2019 reduced permit review time for affordable housing from four months to around six weeks. According to local officials, prioritizing these projects across multiple departments—including planning, codes, public works, and fire—has cut costs and sped delivery. At the state level, California’s SB 35 law provides a more predictable, streamlined review process for affordable and mixed-income housing, and research from Pew Charitable Trusts suggests it has significantly shortened approval times in cities across the state.

The economic logic behind fast-track policies has also resonated with big institutional investors. REITs and large real estate companies are increasingly acknowledging the opportunity in mixed-income and mission-driven development. The shift reflects a broader recalibration: speedier zoning and entitlement policies reduce risk, making social impact projects more financially compelling. In Los Angeles especially, the alignment of public policy and private capital is creating a surge of momentum that many in real estate had long believed was possible only in theory.

Still, the model is not without its critics. In L.A., homeowners in historic zones have raised objections, arguing that exempting these areas from ED1’s fast-track process could protect neighborhood character. Meanwhile, Honolulu’s attempt at fast-track housing under Bill 7, setting 90-day permit deadlines, has faltered. As of mid-2025, no projects had met that target, and structural issues like understaffing and outdated systems have slowed approvals. Fast-track policies can work, but only if local government has the capacity and political will to deliver.

What’s happening in L.A. should serve as a playbook. One of the largest barrier to housing development, affordable or not, is the time and uncertainty around the permitting process. When cities align regulatory speed with housing goals, you get explosive growth. But the lesson is not just about building fast—it’s about making policy smart. Fast-track programs may be the lever that finally unlocks the scale of affordable housing the country so desperately needs.

Overheard

Landmark Ruling Narrows Landlord Claims When Tenants File Bankruptcy

A federal bankruptcy court in Massachusetts just issued a decision that could meaningfully shift the balance of power between landlords and tenants in bankruptcy. In In re Herritt, the court ruled that for purposes of Section 502(b)(6) of the Bankruptcy Code — which caps landlord claims after lease termination — “termination” and “surrender” can be interpreted more broadly than state law permits. In practical terms, the court said a lease can be considered terminated even if state-law formalities haven’t been completed, and surrender of the premises doesn’t require a rigid legal process.

Section 502(b)(6) limits how much a landlord can claim after a tenant defaults. Instead of being able to demand full unpaid rent, the landlord’s claim is capped to the greater of one year’s rent or 15 percent of the remaining lease term (up to three years), depending on when the tenant surrenders the space. By ruling that termination and surrender can happen without strict adherence to state law, the court makes it harder for landlords to argue for more favorable dates and likely reducing the size of their claims.

For landlords across the country, the implications are serious. This decision gives Chapter 11 or Chapter 13 debtors more flexibility to limit claims from real estate lessors by arguing that surrender (and thus the triggering event for the cap) occurred earlier than state law would normally allow. That will shrink the payout landlords receive after a tenant’s bankruptcy, especially in high-stakes situations like retail or office leases. Given that landlords’ claims are unsecured, they already head into these cases in a vulnerable position.

On top of that, the decision signals a growing willingness among bankruptcy courts to favor the economic realities of a case over technical state-law formalities. The court reasoned that if landlords were allowed to delay termination until all state-law steps played out, they could “maximize damages” in ways Congress never intended. That approach aligns with a broader trend in bankruptcy jurisprudence: prioritizing equitable distribution over rigid contract definitions.

Landlords, especially in sectors like retail and commercial real estate, where lease agreements are central to value, need to revisit their risk models and legal strategies. They may need to more carefully spell out termination and surrender conditions in lease contracts, negotiate stronger protections, or plan for lower recoveries in bankruptcy. In a world where “surrender” can be interpreted based on conduct rather than formal legal definitions, every clause matters—and so do the facts.

Norway’s Sovereign Wealth Pivot: Linking Office Real Estate with Green Power

Norway’s sovereign wealth fund, the world’s largest with more than $2 trillion under management, is making a meaningful shift in how it approaches real estate. After several years of underperformance in office and retail, the fund plans to overhaul its property strategy, treating buildings not just as income assets but as part of a broader transition toward renewable energy. For a fund that often sets global benchmarks for institutional investing, this is a signal that traditional property allocations may not deliver the returns—or climate alignment—it wants going forward.

The new plan draws directly from its broader renewables push. Norges Bank Investment Management has been expanding its clean-energy investments, including a $1.5 billion commitment to Brookfield’s Global Transition Fund II. At the same time, the fund is looking for ways to integrate that energy strategy into real estate, favoring buildings that can operate more efficiently, support on-site generation, or pair with adjacent grid infrastructure. This isn’t theoretical. The fund has already taken major positions in prime office districts like London’s Mayfair and Covent Garden, and it now wants those holdings to align with its clean-power thesis, not simply traditional rent-growth expectations.

If the fund follows through, the ripple effects could be significant. When the world’s biggest investor starts linking office strategy to renewable energy, it nudges the rest of the market toward similar thinking. Developers and landlords may find new incentives for energy-efficient retrofits, on-site solar, battery storage, or grid-support technologies—features that suddenly matter not just for operations, but for attracting capital. Norway’s oil fund is treating real estate as part of a much larger energy system. If others follow, today’s office buildings may look very different a decade from now.

Are You Enjoying This Newsletter?

Propmodo Daily is written and edited by Franco Faraudo with contributions from readers like you and the Propmodo team.

📧 Forward it to a friend and suggest they check it out.

🔗 Share a link to this post on social media.

🗣 Have ideas for future topics (or just want to say hello)? Share your feedback and tips at [email protected] or connect with us on X through @propmodo.

✅ Not subscribed yet? Sign up for this newsletter here.

📫️ Please add our newsletter email, [email protected], to your contacts to make sure you don’t miss any updates.

Enjoy reading about trends and innovation in commercial real estate? Subscribe to Propmodo.com for unrestricted access to reliable, data-driven journalism and exclusive insights available only to subscribers.