Commercial Zoning: Understand the Basics

Understanding zoning as it relates to commercial property is essential for commercial real estate investors and property developers because failing to follow regulations can create a world of costly hassle. Local governments use zoning to regulate land use by creating zoning classifications such as residential, commercial, agricultural, industrial, and hospitality, among other more specific categories. Zoning bylaws are the reason why you do not see a coal power station next to your local grocers. Let us begin by discussing how zoning differs for each type of commercial real estate.


Industrial zoning issues are on the more complex side. To begin, areas zoned for industrial spaces are divided into two types: light and heavy industrial. Light industry covers manufacturing businesses that are usually less capital-income intensive. Their facilities normally have a reduced impact on the environment and so, zoning laws are more likely to permit light industry near residential areas. Manufacturing, packaging, warehouse and distribution facilities for the food, paper making, plastic, leather, textiles, and household electric appliances industries fall into this category.

Some examples of the heavy industry include oil, mining, steel, chemicals, and machinery manufacturing. The distinct difference between light and heavy is that while light industries produce products for individuals, heavy industries are extremely capital-intensive and cater to other businesses. Zoning authorities are stringent when they create laws and exceptions for businesses that require this type of zoning permit because the noise, waste, smells or smoke emitted may severely impact the surrounding environment.


Although retail zoning laws are not as complex as industrial ones, different types of businesses within retail must abide by certain requirements. Commercial lots ranging from gas stations to retail spaces for small business owners are subject to very specific and varying rules. To an investor or developer, these requirements are not a top priority until they start to consider what types of tenants will use the property. A real estate brokerage’s landlord and tenant representation service includes analyzing zoning bylaws and their compliance for this reason.


In general, multifamily zones permit both single-family and multifamily units, while single-family zones are restricted to single-family properties alone. The neighbourhood density and building heights are an important decision-making factor that authorities use. Therefore, some multifamily zones only include duplexes, triplexes, or quadplexes. Larger apartment buildings for sale or lease are often built in a separate multifamily zone. Note that some apartment buildings with multiple units for rent are classified as commercial real estate because they generate returns.


Buying, leasing, building, or managing commercial realty is a complex task in and of itself but understanding how zoning laws affect real estate is even more so complicated. Searching “commercial real estate for sale near me” or talking to a real estate advisor is the first step to managing properties successfully given an exorbitant amount of zoning requirements.

At Beacon Real Estate, we provide acquisition and disposition of industrial, land, multifamily, office and retail properties. Moreover, we help clients navigate through complex lease negotiationstenant mixes, and of course, zoning laws. Contact our real estate agents here to get started.