Thursday, December 3, 2015

Rezoning-When it works and when it doesn't

Changing a property's zoning classification can be a major decision for a property owner.  In some cases it will improve the use and ultimately the value of the property, and in some cases, it could hurt the overall value.

How could it hurt a property's value by going to a higher, more intense use?  Well, for example, if the property is an existing building, lets say a residence, and the new zoning would allow for an office use, then the owner is required to bring the building up to code with ADA, plumbing and electrical improvements, and most importantly, parking.

Most of the "proper" conversions I have been a part of or had knowledge of, has been in the $40k-$50k range with some as high as $100,000.  Concrete and drainage alone represents a large portion of most conversion budgets.  A CPZ overlay or beautification requirement is a landscaping expense that most owners do not take into consideration.

Therefore if other comparable "converted office" properties is X, then the "un-converted value" would be X minus the renovation costs.  This may reduce the perceived value that an owner estimates their property to be worth.

The decision making process of whether to rezone or not should include a financial analysis and feasibility study.  If you can not use the property for its proposed use once rezoned, then a new approach must be taken. 

The bottom line is do the research and homework to determine if a rezoning is the right thing to do for your property.

©Mark Subervielle 2015

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