Commercial Land Vs. Industrial Land

Industrial estate land development
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It’s easy to think of industrial land and commercial land as one and the same thing, comprising every type of land that is not used for residential housing. Yet they are two very different entities. As a zoning classification, commercial land covers most types of nonresidential property – everything from restaurants and stores to banks, bars and the dry cleaning business that’s found on every street. An industrial designation implies something messier, like a factory, that needs setting apart from residential zones.

What Is Zoning?

Zoning is a set of rules that restrict what purposes land can be used for. For example, a piece of land may be zoned as ​agricultural​, which means that it can only be used for farming activities or as ​residential​, which means that it can only be used for housing. ​Commercial​ and ​industrial​ are the other primary categories of zoning, although there may be plenty of subcategories within those primary groups. For instance, an area that is zoned for residential use may prefer single-family dwellings and may restrict the number of new apartment buildings that can be constructed in the residential zone.

Who Decides on Zoning?

Zoning takes place at the local level – typically municipal or county – and local zoning ordinances will define what land is designated for a specific use. That’s because the purpose of zoning is to segregate land uses that might be incompatible. It makes sense that building a new factory right on the doorstep of a residential neighborhood would not go down well with residents, since a factory in this area could pose a threat to health.

Similarly, business owners might prefer that local businesses are grouped together in a city’s commercial district with good transport links and amenities for employees so they can attract clients and staff. Additionally, there can be rules restricting controversial businesses, like adult entertainment establishments from opening close to churches or schools. Local governments routinely develop master plans that zone certain neighborhoods for certain uses within the municipality.

Commercial vs. Industrial Zoning

Along with agricultural land, commercial land and industrial land are the primary nonresidential categories of zoning.

  • Commercial zoning:​ Means the land is designated for use by businesses that interact with the public like offices, retail shops, shopping centers, hotels, restaurants, banks and bars. These businesses generally are not noisy or messy and many can happily coexist alongside residential units. When zoning land for commercial use, local governments will take into consideration such matters as accessibility, transport links, parking and impact on local residents. 
  • Industrial zoning:​ Also means the land has been designated for use by businesses, but the public does not tend to visit these facilities since they’re more on the manufacturing and distribution side. Examples include factories, power plants and storage facilities. These facilities may be noisy, dirty and heavy on emissions, so the main concerns relate to the facility’s environmental burden and its possible impact on human health. 

Zoning Ordinances and Changing Zoning

A lot of thought goes into the development of zoning ordinances, and municipalities work hard to ensure that they have the right land uses in the right places to protect their residents and to support the area as it grows and changes. For developers, this means it can be challenging to change a zoning ordinance if they wish to use or develop land for something other than its authorized purpose. That’s not to say the land cannot be used for a prohibited use, but a special permit will be required.

Generally, it is easier to change specific zoning restrictions than a primary use category. For example, if land is zoned for commercial use with a restriction on buildings higher than two stories, it generally will be easier to get an exception for a three-story building than to attempt to have the entire plot of land redesignated for industrial use. Full re-zoning is rarely easy since it interferes with the city’s master plan.

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