Blog - Commercial

14 August 2018

ZONING: WHY IT MATTERS FOR COMMERCIAL OWNERS AND TENANTS

Zoning refers to the local council regulations that control how land in a specific area can be used, both now and in the future. So, it’s important to know what it is and how it works.

Zones in local council jurisdictions across Australia vary, but they usually fit into five broad categories:

  1. Residential
  2. Commercial
  3. Industrial
  4. Agricultural
  5. Recreational

Within these general categories, there may also be subcategories that define what type of commercial activities can be conducted in a specific area or on one particular site. Some areas can also be zoned for more than one use – for example, for both residential and commercial.

Building being torn down by a bulldozer in an unknown location after a rezone of the area

Additional zoning restrictions

Some areas or buildings can also face additional zoning restrictions. For instance, buildings may be heritage-listed, which usually restricts a commercial property owner or tenant’s ability to do things such as:

  • Change the façade – that is, the exterior look of the building. That may also potentially include restrictions regarding your ability to install external signage
  • Change the internal fit-out of the building.

Zoning restrictions may also regulate noise levels, potentially affecting the types of business activities that commercial owners or tenants are allowed to conduct. There may also be construction restrictions on the characteristics of new commercial property constructions, such as:

  • Building height
  • Setback from the street
  • Proximity to other buildings.

Surrounding areas

There can even be zoning restrictions imposed on the surrounding area of the commercial premises, such as footpaths. For example, council rules may prevent businesses, such as restaurants and cafes, from putting tables and seats on the pavement outside their premises.

Cafe tables on a sidewalk where council has not placed zoning restrictions

A regulation like that could reduce the revenue-earning potential of a food and beverage operator located on that site, which in turn would reduce the amount of rent that the property owner would be able to charge.

Do your due diligence

Any person or organisation that is planning to buy, modify, use or build a commercial property should do their due diligence by contacting the local council to ensure that property plans fall in line with both current and future zoning regulations.

Local councils typically have zoning plans for several years into the future which are publicly available on their websites. You can also contact them directly to obtain the information you need.

Rezoning

From time to time, councils may rezone specific areas.

But these decisions are not made overnight.

Rezoning typically requires extensive community consultation that includes making the proposed rezoning plans publicly available for feedback.

But if or when rezoning decisions are made, they have a direct impact on the commercial property market.

In some cases, rezoning can even substantially increase the value of land, for example, if semi-rural was to be rezoned to residential, allowing for more development.

About TGC

The real estate agents at TGC are experts in commercial sales and leasing. If you’re looking to purchase or rent commercial property we can help you make an informed decision, being particularly mindful of zoning restrictions that govern the site’s use. Contact us today!

Date: 14 August 2018 Author: TGC Writer
Commercial
TGC Commercial Real Estate Property Logo Lozenge

About the author:

TGC Writer

TGC is the largest privately owned commercial real estate agency in the Sydney CBD, with over 20 years experience servicing the CBD, City Fringe and greater Metropolitan property market. We’re committed to assisting you with your total property needs, including buying, selling, leasing and property management.

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