Commercial Land in Big Texas Cities Can Now Hold Apartments: What SB 840 Means for Your Lot

Picture a strip center in Plano. A nail salon, a vacant restaurant, and an acre of parking that's never more than a third full. Two years ago, putting apartments on that lot meant a rezoning, months of hearings and a vote you might lose.

Today, in most cases, it means a permit application. That's Senate Bill 840, and a lot of people buying and selling commercial land in Texas still haven't priced it in.

What changed

SB 840 took effect on September 1, 2025. It says a covered city must allow multifamily or mixed-use residential in any zoning district that allows office, commercial, retail, warehouse or mixed-use development. The city can't require a rezoning, a variance, a special exception, a conditional use permit or any other discretionary approval. If the project meets the rules, staff approves it.

"Multifamily" means three or more units. "Mixed-use residential" means at least 65% of the floor area is housing. So a ground-floor shop with apartments above counts, as long as housing is most of the building.

Which cities

It covers cities with more than 150,000 people that sit at least partly in a county of more than 300,000. That's 19 cities by most counts: Arlington, Austin, Brownsville, Corpus Christi, Dallas, El Paso, Fort Worth, Frisco, Garland, Grand Prairie, Houston, Irving, Killeen, Lubbock, McKinney, Mesquite, Pasadena, Plano and San Antonio. The list can shift as population estimates change.

Houston is on the list, but it has no zoning districts, so the main rule has little effect there. The conversion rules below may still matter.

What the city can still ask for

The city keeps some control, but the law sets floors it can't go below:

• Density: at least 36 units an acre, or the highest residential density allowed anywhere in the city, whichever is greater.
• Height: at least 45 feet, or the height allowed for commercial uses on that site, whichever is greater.
• Setbacks: no more than the site's commercial setback or 25 feet, whichever is less.
• Parking: no more than one space per unit, and no required garage. No floor-area-ratio cap.

Building codes, stormwater rules, water and sewer access and historic preservation rules still apply.

Where it doesn't apply

Four exclusions knock a lot out: zoning that allows heavy industrial use, land within 1,000 feet of an existing heavy industrial use, land within 3,000 feet of an airport or military base, and areas the city has designated as a clear zone or accident potential zone. That 3,000-foot airport buffer catches more land than people expect.

And deed restrictions are private. If a commercial lot carries a recorded covenant against residential use, SB 840 doesn't erase it.

Old buildings get a path too

Office, retail and warehouse buildings at least five years old can be converted to housing, as long as at least 65% of the building (and of each usable floor) becomes residential. The city can't demand a traffic study, more parking than already exists, or design rules beyond the International Building Code. A companion law, SB 2477, adds more rules for office conversions.

How cities are responding

It depends on the city. Dallas published a list of eligible districts and moved to administrative permits. Austin started taking SB 840 applications on day one. Plano reported 40 inquiries and three projects totaling 827 units under review by May 2026, according to Bisnow.

Some suburbs are pushing back with new requirements, like minimum heights in Frisco and Arlington or amenity rules elsewhere. Whether those hold up under the law hasn't been tested in court yet, and the bill's author has said he'll try to tighten it next session. A report from groups that back the law counts about 8,764 units tied to SB 840 in its first nine months.

How to check a lot in five steps

1. Confirm the city is one of the 19.
2. Look up the lot's zoning and confirm it allows office, commercial, retail, warehouse or mixed use.
3. Measure the distance to heavy industry (1,000 feet) and to airports or military bases (3,000 feet).
4. Pull the title for deed restrictions, and check overlays and historic designations.
5. Ask the city planning department for a written answer. Dallas, for one, decides each application case by case.

If you're selling commercial land in one of these cities, the buyer pool just got bigger. If you're buying, check whether the price already reflects that.

The zoning map didn't change. What it means did.