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Does zoning truly matter when buying commercial property?

On Behalf of | Nov 8, 2022 | Real Estate Closing |

Commercial real estate costs more than a property of similar size or locations with residential zoning. Businesses looking to purchase vacant land or existing building for company operations may look into any properties that could theoretically work for their purposes.

Some of those properties will inevitably have different zoning than what you would require given your business operations. There are residential, commercial, industrial and agricultural zoning designations.

Improper zoning is such a serious concern that many real estate investors and business executives, as well as residential property buyers in mixed-zoning areas, may pay for a letter from the local government certifying the current zoning of a property. Is the zoning of a commercial property one of the deciding factors about its usefulness, or is it only a minor consideration?

There are ways around zoning issues

Although zoning rules exist to preserve the characteristics of a community, local policymakers also understand the importance of flexibility and allowing areas to evolve over time. In some scenarios, you could submit a petition requesting a zoning variance. This allows your organization to conduct its business with the zoning remaining the same without technically violating the rules.

However, if you believe that your business will attract others to the area, then changing the zoning permanently may be a better approach. This will also require community approval and can be a very lengthy and expensive process. Still, when successful, it will give your company the ability to operate at a property where it would not have previously been possible.

Finding a property with the right zoning is often easier and cheaper than trying to change the zoning of a lower-cost property. When you factor in the cost of obtaining a variance or changing the zoning for a property, it is often far more cost-effective than saving a few thousand dollars on the initial purchase and then being unable to use the property in the way that you intended.

Evaluating factors that influence the value of a property and the steps to take during a real estate transaction can help you make a purchase that will benefit your company.