A Major Shift Toward ED1 in the Los Angeles Development Pipeline

Developers across Los Angeles are making a noticeable shift. With market-rate construction becoming increasingly difficult to entitle and finance, more builders are turning to fully affordable projects that qualify under Executive Directive 1. According to recent reporting from CoStar and The Wall Street Journal, ED1 has become the most reliable path to approvals in the city, even as rising costs and long timelines slow traditional multifamily development.

This trend marks a significant moment for Los Angeles multifamily ED1 development, signaling a new direction in how housing gets built and how developers are approaching feasibility.

Why ED1 Has Become the Most Predictable Approval Path

Executive Directive 1, introduced in late 2022 by Mayor Bass, was designed to accelerate income-restricted and supportive housing. ED1 dramatically reduces entitlement timelines and removes key sources of uncertainty across the development process.

Key advantages include:

• Ministerial approvals with no public hearings
• No City Council votes required
• Clear, objective processing standards
• Approval timelines reduced from 9 to 12 months to roughly 60 days
• Increased density allowances in many areas
• Eligibility for affordable housing financing tools and tax exemptions

For developers who have struggled with protracted entitlements, community pushback, and fluctuating political conditions, ED1 offers something the city has lacked for years: predictability.

Why Developers Are Leaving Market-Rate Projects Behind

The shift toward ED1 is driven by simple math. Many developers report that market-rate projects no longer pencil under current economic conditions.

Primary challenges include:

Financing Conditions
Construction lenders have tightened standards and reduced leverage. Without institutional capital, many projects cannot start.

Rising Construction Costs
Tariffs, materials inflation, and labor shortages have raised per-unit construction costs to historic highs.

Break-Even Rent Requirements
Developers estimate that new apartments would require monthly rents between 4,000 and 5,000 dollars to break even, limiting tenant demand and slowing absorption.

Regulatory Uncertainty
Concerns around Measure ULA, new labor rules, and entitlement delays have pushed investors to other markets.

With these challenges, developers who once focused on market-rate or coliving structures are now shifting toward Los Angeles multifamily ED1 development for its feasibility and consistency.

The ED1 Pipeline Has Surged Since 2022

The data reflects the rapid adoption of ED1. Since the directive took effect:

• More than 42,000 affordable units have been submitted under ED1
• Approximately 31,700 have received approvals
• This is more than double the volume seen in the three years prior

For Los Angeles, this is one of the largest surges in affordable housing applications in decades.

Not all approved projects will break ground, given rising interest rates and financing complexity, but the scale of submissions shows how dramatically the development landscape has shifted.

What ED1 Does Not Solve

Although ED1 provides a faster approval path, it does not eliminate the broader challenges facing developers.

• High interest rates continue to strain construction financing
• Material costs remain elevated
• Many projects still struggle to secure long-term subsidy layers
• Some ED1 approvals have stalled due to cost inflation

This is why accurate underwriting and conservative assumptions remain essential.

A New Ordinance Could Make ED1 Permanent

The Los Angeles City Council is now reviewing an ordinance that would convert ED1 from a temporary executive directive into permanent legislation. If approved, this would solidify ED1 as a long-term foundation of the city’s development strategy.

For developers, this could create a stable, long-range planning environment that supports consistent modeling for land acquisition, funding strategies, and affordable housing production.

What This Means for Developers and Multifamily Owners

The rise of Los Angeles multifamily ED1 development has several implications:

Land Value Realignment
Properties that qualify for ED1 density and height allowances may see increased long-term value.

Shift in Development Strategy
Builders who once focused on market-rate may reposition toward ED1-eligible parcels.

Increased Competition for ED1 Sites
As more firms pursue income-restricted development, well-located ED1 parcels will become more competitive.

Long-Term Supply Dynamics
If market-rate development remains limited, the next cycle may see tighter supply in mid-market and luxury inventory.

Conclusion

Executive Directive 1 has reshaped development patterns across Los Angeles. With predictable approvals, reduced entitlement risk, and faster timelines, ED1 has become the most reliable path forward in a market where traditional multifamily development faces significant obstacles.

As more developers move toward Los Angeles multifamily ED1 development, the city’s long-term supply mix, affordability strategies, and land valuation dynamics are shifting. Understanding how ED1 fits into the broader investment landscape is essential for owners and developers preparing for the next cycle of opportunities.