Understanding Zoning Laws And Why It Matters In Commercial Real Estate

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Know the importance of zoning laws to make better and more sound real estate investment decisions

In this article:

  1. Zoning Laws and Its Parameters
  2. Types of Zones
  3. What Does a Zoning Law Regulate?

The Importance of Zoning Laws in Commercial Real Estate


Zoning laws: determine the types of structures you can build within specific areas, or “zones,” of a city. In some cases, they determine if existing structures may even be replaced with something new at all.

Zoning Laws and Its Parameters

Sometimes referred to as land zoning, these laws specify the way the land in specific sections of the city can be used. Based on the land zoning codes, businesses coming into the community may need to be certain types of businesses, may face limited growth prospects, or may face other restrictions.

In some areas, neighbors, investors, developers, etc., can lobby to make changes to zoning laws that benefit them while being detrimental to those around them. In other words, it’s important to understand existing zoning laws relating to commercial real estate.

You also need to stay up-to-date with laws that are in the works or under discussion in your community as well.

The purpose of these laws is to protect the health and safety of communities while regulating the rate of growth within the community.

They regulate the types of building and construction that can take place in specific city zones. They also regulate the types of businesses that can be opened in specific zones.

Some cities, for instance, have zoning laws prohibiting alcohol sales or adult entertainment venues near school zones. The better you understand commercial real estate zoning laws in your community, the wiser the decisions you make about investing become.

Types of Zones

bridge and buildings | Understanding Zoning Laws and Why it Matters in Commercial Real Estate | zoning map

Most cities have different zoning categories and special regulations for each type. They include:

  • Agricultural zones
  • Commercial zones
  • Industrial zones
  • Recreational zones
  • Residential zones
  • Rural zones

Some areas, or sections of the city, are designated as multiple use zones. This means some areas of the city may allow for both residential property use as well as commercial property use.

Zoning not only helps to control the rate of growth in the city and the types of businesses and properties that come into particular areas of town, it also helps to ensure that there is sufficient infrastructure within the city to support the growth.

This includes things like:

  • Utilities
  • Roadways
  • Water
  • Sewers
  • Schools
  • Waste management resources

Zoning boards often operate under the premise that if cities grow too fast, they cannot sustain or manage growth and the opposite can occur – crime rises, it becomes untenable and people leave the city. Zoning laws aim to prevent these types of things from happening.

RELATED: Commercial Real Estate Sale And Purchase Agreement | Everything You Need To Know

What Does a Zoning Law Regulate?

Zoning laws regulate different things in different communities. In some modern communities that are largely residential and upscale, zoning laws may regulate any or all of the following:

  • Off-street parking requirements for residential and commercial properties
  • Air quality restrictions
  • Noise levels
  • Locations of utility lines
  • Number of rooms in buildings
  • Waste management
  • Building appearance (height, square footage, facades, colors, etc.)
  • Business signage regulations (many areas regulate the types of signs you can use, placement of signs, appearance of signs, and even may regulate the use of foreign languages in signage)
  • Number of like businesses within the zone
  • Whether your business can install outdoor seating

Existing businesses within a community are often exempt from new zoning laws. However, if you plan to open a new business in a space formerly occupied by another business, the zoning code will apply to your venture.

This means you need to be aware of where your commercial real estate property lies on the zoning map and what that means for you if you open a business in that location. Make sure you’re aware of the zoning laws in the specific area where you plan to open your business before buying a property or signing a lease.

In a perfect world, zoning laws exist to make life in cities and townships throughout the country better. They help to support certain living standards, to keep communities beautiful, and to ensure there are sufficient services to meet the current and growing needs of the people who live and work within the community.


While there are no such things as perfect zoning laws, and they can be enormous hassles for new businesses coming into these communities, the laws, by and large, do accomplish their goals of creating sustainable growth. The kind that helps to continuously bring in new businesses and new residents to contribute to the community for everyone.

That is why it is essential for businesses interested in purchasing or leasing commercial real estate to stay abreast of how those laws affect your investments.

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