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Beyond Opportunity Zones: How City Zoning Helps CRE Professionals Evaluate Opportunities

March 1, 2019
Commercial Real Estate, Zoning
By: Jason Holte

Don’t rush into a property investment or development within an opportunity zone without doing your homework first! Here’s why zoning matters.

The race is on to take advantage of qualified tax opportunity zones. This government incentive for investing in low-income communities is currently authorized for seven years, meaning that investors and developers alike are seeking to maximize their opportunities (pun definitely intended).

Beyond Opportunity Zones: How City Zoning Helps CRE Professionals Evaluate Opportunities

There are many applications, including our map-based real estate application, LandVision™, that allow you to visualize opportunity zones within your market. But finding an opportunity zone, and a promising property within one, is only half of the battle. There are numerous other factors to evaluate prior to making an investment in a property, and today we’d like to take a closer look at why understanding zoning information should be one of the first steps in your process.

Using the Opportunity Zones Layer in LandVision: A Primer

As a quick background note, LandVision gives you two easy ways to understand properties within opportunity zones. For any parcel you select in LandVision, the property information panel will tell you if the property is located in an opportunity zone or not. If you would like to conduct a wider search for properties in opportunity zones, you can also select “Qualified Opportunity Zones” from our layers panel to overlay them on your map. Selecting an opportunity zone will give you the ability to search within the area for properties meeting your other base requirements, including building square footage, aggregate acreage, assessed value, and more.

Now that we’ve covered the basics, let’s dive further into analyzing properties within opportunity zones.

Looking Beyond Land Use to Determine How a Property Can Be Developed

Some might confuse land use codes with zoning when, in fact, they are different.

Property records are maintained by counties with a focus on tax assessment. Land use is often tracked within property data collected by the county assessor’s office, but this value reflects the existing use for a given property and does not provide all of the context needed to understand and plan property development. A property’s land use can be commercial, for example, but the zoning or overlay zoning that governs the surrounding area may impose specific guidelines for how the property can be developed for commercial use.

Many real estate applications depend upon public record data from the county assessor’s office for municipal zoning information. Unfortunately, when it comes to public record zoning data, the field “zoning” is often missing, incomplete or inaccurate. To fill in any gaps, users may be forced to leave their application of choice to seek out the zoning information that applies to any properties under consideration. Using LandVision, however, zoning and overlay zoning are available* as data layers that can be applied to paint the full picture of how a city or county intends for a specific property to be utilized, including whether any preservation guidelines exist for historical or environmental reasons.

The next section will walk you through a specific example to illustrate why the ability to combine all of these pieces of information within a single application is such a powerful capability to have.

Case Study: Opportunity Zones in Dallas

We’ve selected Dallas to serve as the environment for our walkthrough. As measured by population census tracts, Dallas contains the most opportunity zones (18) in the greater Dallas-Fort Worth metroplex. Although there are two types of opportunity zone (low income and non-low income), each zone in Dallas is categorized as a low-income community.

Visualizing opportunity zones in LandVision - Dallas, TX

For our property search, we chose to search within an opportunity zone just southeast of Dallas City Center for a vacant parcel (or a few adjacent parcels owned by the same entity) with an aggregate acreage greater than 50 acres. To round out our initial search, we wanted to find only properties designated for commercial land use according to the property record. This led us to a 52-acre property located next to a rail line at 318 Cadiz Street.

Example property within an opportunity zone using LandVision

If we stopped at the results of our initial search, we would only know that this property can be developed for commercial use. However, we’d like to gain a better understanding of what additional factors we may need to consider based on zoning and overlay zoning. Beginning with zoning, the code for this particular area is PD 800. This means that the property falls within a Planned Unit Development, and the specific code indicates that the parcel can be developed for multifamily housing, office, medical office, or hotel use. Based on this insight, we now know that beyond simply commercial development, the city is likely seeking mixed-use development in the nearby area. When applying the zoning overlay layer in LandVision, we see three additional overlay zoning districts that could impact development:

  • SH-11 (shopfront)
  • GS (Grow South – additional research suggests the city seeks to extend the Cedars Corridor)
  • DDO-2 (demolition delay)

The SH-11 overlay supports our hypothesis about mixed-use development for this property, as the city is seeking to create pedestrian shopping streets in the area. The demolition delay tag indicates the city’s desire for preservation in the area. However because we have selected a vacant lot, this particular overlay is not a development hurdle for the site in question.

Learn More

As you can see, because we did not stop at land use for the property we analyzed, we were able to easily identify additional considerations that could impact development. Best of all, because all of the zoning information we needed was available within the same application where we were conducting our research, we saved some valuable time that could be put to use in planning the actual development of our target site.

Our thanks to Zonability President & Founder Leigh Budlong for contributing to this post! Contact us to learn more about how the DMP location intelligence platform can help you understand city zoning, a premium add-on with base and overlay districts*, and over 300 additional characteristics impacting parcels.

*Available in select markets

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