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How Much is Commercial Zoning Worth?

by Guest on Feb 7, 2012 General Appraisal 1348 Views

Its a mistake to assume that commercial zoning is always a land value enhancement.  Few experienced market participants consider zoning to be the most important factor influencing real property value.

Common sense tells us that most commercial endeavors require accessibility and visibility from a high traffic roadway or roadways.  Its important to understand that zoning doesn't always make a poorly located property more desirable.   It will provide an owner with more development options or flexibility however if the property is best suited to a residential or industrial purpose it's commercial zoning adds nothing.

Most buyers realize that zoning can often be changed, and when it is necessary to have more intensive zoning for a development project its rezoning can be attempted while the property is in escrow.  If the rezoning fails the sale is cancelled.

Residential properties that can sometimes be used for high density development and that use can be worth more than that of commercially zoned properties with fair locations or poor offsite developments. 

The value of vacant land in any market has to do almost entirely with supply and demand.  If there are 1,000 acres of commercially zoned land in the market with only 20 acres per year (or 2%) is being absorbed and 2,000 acres of residential land with 500 acres per year (or 25%) being absorbed you can imagine that lots of individuals who own commercially zoned land will submit to rezone it to residential rather than wait many years to sell it into the slow commercial market.

Appraisers follow supply and demand statistics in their study market closely.  They generally are aware of the average sales price of property by zoning type and the length of time that it takes to sell a vacant property by zoning type.  As they will tell you, I'm saving you a phone call, market statistics don't apply to any individual property.  Just because the average sales price of vacant commercial property is say $ 700,000 per acre doesn't mean your site is worth that.

So the answer to the question "how much is commercial zoning worth," can only be answered by someone familiar with all of the economic and physical characteristic that affect the property in question.
 
For more appraisal information contact Glenn Rigdon, MA,MRICS, ASA a Las Vegas / Henderson Nevada appraiser via email or via his business website Horizon Village Appraisal (http://www.horizonvillageappraisal.com), or you can also click on “Contact Us” on the home page of this website.

Article source: http://www.appraisalarticles.com/General-Appraisal-Articles/2792-How-Much-is-Commercial-Zoning-Worth.html

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