Return To Blog

Analyzing the Effects of Zoning Regulations on Commercial Real Estate Development 

What are zoning regulations, and how do they affect real estate?

Zoning regulations are essential when buying and selling land and buildings.  These regulations limit what you can do and how you can do it.  For instance, in certain counties and cities, you may not be able to build certain structures or have houses close together.  There are many different types of regulations, so staying up to date on the regulations in the area of interest is necessary.  When purchasing property, first check the area’s regulations to prevent any unexpected delays and in the worst case a bad investment.

How are these regulations made and enforced?  

Typically, there will be a public hearing where people will discuss their opinions on changing a zoning regulation.  Ultimately the regulation is decided by the elected official.  Regulations are enforced by requiring approval for projects.  If projects fail these approval stages, they could be set back by months.  To avoid this, review the regulations before purchasing and build connections with those who enforce them. These steps will help ensure the best chance of success.  Knowing the authorities involved will help you prepare in advance.  Remember that regulations can vary drastically just ten miles away in another city.

So, what are the effects of zoning regulations on real estate?  

Well, each situation is different; in some cities, you may not be allowed to build to a certain height without approval. These costs can add up quickly if not monitored.  Zoning regulations can also dictate the type and style of buildings allowed in certain areas.  Buying land that is not regulated correctly is extremely risky.  When attempting to get proper zoning, you must have a public hearing, and listen to what the people say, and then ultimately elected officials decide.  Trying to bypass these regulations, even unknowingly, can result in fines and project delays, and potentially even the closure of your project.

The best approach to zoning regulations is… do your research! Know exactly what you’re getting into before proceeding.  Seek advice from developers and those familiar with zoning regulations.  Check the department website for the latest regulations.  Be prepared for inspections and ensure your compliance to avoid delays.  Be accommodating towards the inspectors and follow their regulations.  Always check for the zoning regulations before purchasing the land.  You don’t want to buy the land and then realize it can only be used for residential.

Don’t get frustrated if you face delays…

…focus on fixing the problem to continue with your project. Keep your eyes on the end goal, and remember that each step brings you closer to completion.  For information on your area’s zoning laws, contact the local municipality.

Zoning regulations can also…

…determine the usage of a piece of property. It can be about the building process or the type of building allowed.  Before purchasing land, it’s crucial to know its designated use.  Additionally, the specific type of building you want to construct may have different zoning requirements from other nearby structures.

Zoning regulations are essentially…

….a list of rules for developers and realtors to follow. They significantly impact a city’s success; strict regulations can hinder early development. Developing land takes time, and usually goes most smoothly in the summer, so passing every regulation is vital for a smooth project.  The slightest mistake could cost time and money, potentially even the entire investment.

Knowing zoning regulations allows you to…

…anticipate unexpected costs in advance. Developers must be well-informed for their job to succeed. Regulations can add time and money, and being aware of them is crucial for success. Developers deal with small details, and that’s precisely what zoning regulations are.  Some regulations offer more leeway than others, so understanding them helps your company accurately budget cost and completion time.  The restrictions they impose are endless, which is why you need to know them.  Remember that if a piece of land isn’t properly zoned that you are at the mercy of the people.  As a rule of thumb don’t buy land that isn’t zoned for what you need.  

This blog post was written by one of our dedicated interns as a part of our 2023 Summer Intern Program, where they delved into the world of commercial real estate. We’re thrilled to have played a role in their education and experience.

If you found this post informative or insightful, please consider sharing it with your network. Thank you for joining us in supporting the growth and development of the next generation of commercial real estate experts!