How Zoning Issues Can Impact Your Commercial Space

Whether you’re taking your business from your basement to the streets, moving an already-successful enterprise to a new location or getting ready to buy commercial real estate (CRE) to rent to prospective tenants, when you’re finally willing to take the plunge, zoning could turn out to be your best friend or your worst enemy.

Ultimately, you’ll save time, money and headaches by enlisting a lawyer specializing in zoning and land use to help you with any issues you might encounter, but let’s not get ahead of ourselves. Boning up on the basics and familiarizing yourself with the lingo of urban planning is the best way to start your zoning education

What Is Zoning and Why Is It Needed?

There are solid cases both for and against zoning. Some argue that without it, development would be a dangerous free-for-all. Houston, Texas, a large US city without formal zoning, gives us a preview of what that sort of chaos can look like. In Houston, you can find a functioning rollercoaster literally in the backyard of a longtime beach resident, noisy, multi-lane highways running through once sedate green spaces and a crematorium operating within feet of a slew of single-family residences.

Others argue that because of over-zealous zoning, housing becomes less affordable and creative thinking about how residential and commercial real estate can co-exist gets stifled.

Whether you’re for or against zoning, if you’re considering buying commercial real estate in Canada, you’ll be subject to both provincial land use planning restrictions as well as municipal zoning bylaws. Each province has its own rules governing how land can be used, where buildings and other structures can be located, the types and density of buildings allowed, along with regulations on how various buildings can be used. Municipal bylaws add requirements around parking and signage, lot size, building height and dimensions, plus the minimum distance a building can be located from a property line or street (also known as a setback).

Buildings and properties that fall under a “heritage” designation come with more rigorous restrictions than others. Provinces and municipalities protect heritage assets because they represent an important link to a community’s history and culture. Written permission will almost always be required for work that involves altering, demolishing, removing or erecting any sort of building or structure on a heritage property.

Getting Your Zoning Ducks in Order

Before you purchase commercial real estate, it’s imperative you ensure the zoning is correct for how you want to use the space today, and tomorrow. Envisioning your business and the space housing it five years into the future might seem difficult at first, but it can actually help you craft a better business plan by teasing out the must-haves and milestones you’ll need to achieve in order to arrive where you ultimately want to go.

For instance, if you start a boutique fitness centre within a small single-story building but see yourself expanding into the multi-story buildings on either side of you within five years, what sort of annual revenue would it take to make that possible, and would the space you’re currently considering be able to deliver it?

And what about the increased square footage you’d add and the renovations you’d need to do to turn three buildings into one? Would current and future zoning laws even permit it? And what if the neighbouring buildings’ poor permitting or abysmal bylaw compliance from the past were to come back to bite you with costly legal wrangling or prohibit you from occupying the new space at all?

If leasing commercial space to tenants is your business, you’ll still need a detailed and up-to-date list of what is and isn’t permitted under zoning regulations so you don’t waste time wooing the wrong clients.

Doing the detailed due diligence work that commercial real estate purchases require is where enlisting the help of both an experienced commercial real estate agent and a lawyer specializing in zoning, permitting, surveying and land use comes into play.

Can You Apply to Amend a Zoning Law?

If you want to use or develop your commercial real estate property in a way that’s not currently allowed by a zoning bylaw, you can apply for a zoning change, bylaw amendment or a rezoning. You should know, however, that the likelihood of success in all three instances is low due to a myriad of factors, including that both provinces and municipalities have strict windows of time during which their carefully-developed plans and bylaw regulations can be amended. If you submit your rezoning application outside of one of those windows, the delay could be significant, with no guarantee of a positive outcome later.

Even applying for a minor variance (when your proposed property or building use doesn’t precisely conform to a zoning bylaw but follows its general intent) isn’t a slam dunk. And when variances are approved, since some of the most common zoning disputes involve community or government objections to the decisions, you should carefully weigh the risks and rewards of going down that path.

Common Zoning Disputes

It’s good to know if you’ll start with a clean slate at your new commercial real estate location, if the property has previously been the subject of zoning disputes – or, worse yet – is involved in a current one.

Zoning disputes arise when residential property owners, businesses, developers or local governments disagree on the interpretation of zoning regulations. Whether a single individual or an entire community challenges your take on them, you’ll likely be in for a long and expensive fight.

Common zoning disputes include conflicts around:

• Setback
• Building height
• Signage
• Parking
• Pollution (noise, light, odour)
• Septic and solid waste systems
• Building code violations
• Variances
• Rezoning

Educating yourself on zoning basics and hiring experts to do zoning due diligence as part of the commercial real estate purchase process is crucial to minimizing risks and avoiding disputes. Instead of engaging in expensive and acrimonious legal battles, with the right team on your side, you can focus on launching your business and being received with enthusiasm by the community you serve.