Is zoning important in site selection?

[Brooker]

Question: When you are doing site selection for a business, is zoning "really" important? Is zoning one of the first things you consider, or the last (after demographics, workforce, etc.)

Reason Yes -
-Depending on the uses's specifics you need to know the jurisdiction's regulations to a tee. (FAR, Traffic, parking, etc.)

Reasons No -
- Most businesses are looking for sites that by nature are already zoned for their use (business parks, commercial strips, downtown, etc.).
- If the current zone doesn't fit, you can try to rezone, get a variance, etc.

I tried to use etc. in each sentence, etc.

[mike gurnee]

Zoning plays heavily in all the site analysis forms I have seen. The investigator has to ascertain if the site is buildable. There always are questions on how re-zonings or variances are processed and chance of being granted.

This comes after the business has decided to locate in the town through an analysis of demographics, traffic counts, etc.

[JNA]

I agree with mike gurnee.
Some are even looking only for shovel ready sites - zoned correctly, no need for variances, particularly for signs.

[Cardinal]

I'll dissent, but only partially. A good site is going to have the capacity to meet all of the business' site requirements. Many other things rank higher on the list, starting with workforce and working down through infrastructure and other criteria. Many businesses understand that a site may not hive been zoned, but is designated for their intended future land use. With a handful of others, there is no expectation of pre-zoning. Consider the ethanol boom of the 2000's. Most of those sites were simply ag land that had not been identified for any other use. In short, zoning is easy to obtain in most cases, and the economic development and real estate professionals who show sites are unlikely to consider sites that cannot be zoned for the use. So overall, whether or not a site is zoned is far less important than whether it meets other criteria.

[mendelman]

But Cardinal, wouldn't you say it really depends on who's doing the building/holding long term ownership?

I would venture to assume that 80%+ of commercial/industrial properties in the US are owned and/or developed by speculators. Therefore, for the everyday development (retail, restaurant, general office/industrial sites, etc.) the entity developing it wants to some level of assurance whether their desired development could be built on a given piece of real estate.

Though, I agree, land use designation on a Comp Plan, etc may be just as good as actual zoning, but I would guess that land use.zoning suitably is in the top 10 or so criteria when assessing a site.

[cng]

Depends on the price of the property, and whether intentions to build something is long-term or short-term. My most frequent questions, besides "What is my zoning?" include, "What is the likelihood of this property getting rezoned?" ..or, "Would the city/council support a rezoning of this property?" ...or, "Even if the city wouldn't support a rezoning now, would they consider it 10 years from now?" These questions mostly come from speculators, since those intending to build do look for zoning-ready and infrastructure-ready sites, even if these sites come with a higher price tag.

[Cardinal]

But Cardinal, wouldn't you say it really depends on who's doing the building/holding long term ownership?

I would venture to assume that 80%+ of commercial/industrial properties in the US are owned and/or developed by speculators. Therefore, for the everyday development (retail, restaurant, general office/industrial sites, etc.) the entity developing it wants to some level of assurance whether their desired development could be built on a given piece of real estate.

Though, I agree, land use designation on a Comp Plan, etc may be just as good as actual zoning, but I would guess that land use.zoning suitably is in the top 10 or so criteria when assessing a site.

Ultimately it is very necessary. But the usual approach is for the potential developer to secure control of the land through an option with contingencies. One of those contingencies is rezoning to the desired district(s). But for most companies or developers it does not factor much into the search phase. Of course it is sometimes best to have the right designation in place to help in marketing the site - usually industrial the most. In other cases the developer may prefer to have an ad or transitional zoning to mitigate battles over uses or density. (For example, 100 acres zoned single family when the developer wants 80 single and 20 multi - the battle is tougher to raise density than to zone it in the first place.

[Brooker]

Based on the discussion, in a general sense, the bigger or more speculative the project the less likely zoning is important, but for smaller projects it is. A 2,500 acre industrial park not so much, but restaurant chain branching into new territory yes?

As a follow up question - when zoning is important do you rely on broker provided zoning information for the initial cut of potential sites, talk to the jurisdiction first, or do the zoning research yourself before getting to the initial cut of potential sites?

[ColoGI]

Based on the discussion, in a general sense, the bigger or more speculative the project the less likely zoning is important, but for smaller projects it is. A 2,500 acre industrial park not so much, but restaurant chain branching into new territory yes?

As a follow up question - when zoning is important do you rely on broker provided zoning information for the initial cut of potential sites, talk to the jurisdiction first, or do the zoning research yourself before getting to the initial cut of potential sites?

IMHO zoning is important - it is a given. That also means how easy is it to change the zoning or get concessions for large projects. That means delays. I'm not sure I'd rely on a broker, and when you work at a front counter, you see folks come in asking the questions you did.

[luckless pedestrian]

I wish developers would look at the zoning before they purchase - nothing irritates me more than when someone says, but I need x to make it worth what I paid - well, what'd you pay that much for when x isn't allowed?

if it's not zoned for what you want to do there, I think it's highly risky - I am not a fan of use variances, would rather see conditional use allowances and other discretionary tools to allow for that great idea no one thought of

but to not put zoning near or top of the list, to me, isn't good due diligence

[ursus]

Going to second LP's thought. As a municipal planner, I put a lot of thought and planning into my general/comp plan designations, which in turn drive zoning. I don't take any zone change lightly. That's not to say it wouldn't be worthy of doing, but to not put the land's zoning at or near the top of the list is irresponsible at best.

[Brooker]

Thanks all for your help!

[biscuit]

Based on the discussion, in a general sense, the bigger or more speculative the project the less likely zoning is important, but for smaller projects it is. A 2,500 acre industrial park not so much, but restaurant chain branching into new territory yes?

Again, it really depends. For one, you will have a difficult, if not impossible, time acquiring financing for a project without the proper zoning clearances and other entitlements. For large retail, hotel or institutional projects a developer will often have and take the time to get the necessary clearances if the site is considered ideal. Doing this should not be a insurmountable task if the developer has properly done his homework and partnered with the municipal staff prior to seeking a variance or zone change.

That said, success in competitive bid projects can hinge on finding the ideal site with zoning that meets the project needs. Major tenants and owners will often not sink the money into an extended due diligence period in order to get a zone change. Instead they will choose a developer who can deliver the right site with all the clearances.

As a follow up question - when zoning is important do you rely on broker provided zoning information for the initial cut of potential sites, talk to the jurisdiction first, or do the zoning research yourself before getting to the initial cut of potential sites?

Never, ever rely on a broker to deliver all of the pertinent information needed in site selection work. This is not to say that a broker is going to be dishonest, but their number one job is to make a sale, not to perform due diligence work. Using, "But the broker said.." as an excuse when a deal does bad is not proper CYA.

The take-away lesson is to the work yourself or hire a professional to do it for you.