California developer Intracorp Cos. built thousands of condominiums from 2002 to 2008. Since then, it has built none, opting for rental apartments and single-family homes even though they can be less profitable.

“I see demand for condos, because in California people want to live in urban environments,” said Intracorp President Peter Lauener. “But there are constraints on getting off the ground at every turn.”

With...