Zoning: why it matters for commercial property
Commercial zoning legally enforces what buildings are allowed in a particular area and what uses and changes are allowed in and around them.
So your business’s success depends on you being highly conversant with its zoning.
Read on to find out more.
What is a zone?
The main designated zones within metropolitan areas are residential, business or commercial, industrial and mixed-use while regional areas can also include rural and agricultural zones.
There are also sub-categories within these zones that further define what type of commercial business can be implemented and conducted.
“Zone codes are in place to ensure smooth traffic flow and car park allocations,” Luke Boulden of Ray White’s Commercial Gold Coast agency explained.
“They encourage industry-specific centres and are designed to ensure you don’t have too heavy a cross mix between different businesses and homes.
“A good example of this is a trendy cafe popping up in a heavy industrial area where you’ll soon have people starting to whinge about angle grinders and trucks.”
Who regulates zoning?
Different councils and states have different zoning laws and policies so a rule that may apply to one region may not tick the box for another.
Ignorance of these laws and policies isn’t bliss either with fines or even prosecution a strong possibility for businesses who fail to follow zoning orders.
“Zoning compliance for business use is administered by councils and council rangers,” George Karavanas, GSA Planning principal, explained.
“When an unauthorised development results in planning law breaches, a notice is issued in the first instance in most cases, giving a direction of what is required to avoid legal action.
“You’ll be given the opportunity to provide reasons as to why this notice shouldn’t result in the issuing of an order, or a legal document that gives a direction of action to be undertaken to address the non-compliance.
“Failure to comply with the order can result in the issuing of a fine (penalty infringement notice) or prosecution.”
How does commercial zoning impact my business?
Any major structural changes to businesses, particularly heritage-listed buildings, as well as the establishment of new businesses such as gyms, large industrial companies and medical or health ventures will need to be approved by the local council.
However, tenants planning minor fit-out redecorations or shop front and alfresco changes, including signage, only need approval from their council’s licencing department, according to Mr Boulden.
1. Making structural changes to a building
“For any refurbishments that go above and beyond just redecoration, you’ll have to get a development application (DA) or a building application (BA) which will allow you to do extensive building rectification points,” Mr Boulden said.
2. Set up a different business
Industrial, medical and indoor recreation businesses, such as gyms, generally experience the most zoning issues, according to Mr Boulden.
“The industrial sector is a really big player in zoning because there are so many different levels of industrial codes,” he explained.
“Here on the Gold Coast, we’ve got zoning for Industry 1, or light industry, which includes your general run of the mill businesses such as a mechanics or logistic hubs.
“Then you have Industry 2, or heavy industry, which is your high impact businesses like metal works or panel beaters, where there is a lot more noise implications and air pollution.”
Mr Boulden said indoor recreation was another big sector in zoning with gyms, boot camps, yoga and pilates businesses all falling under this banner.
He added that properties in this zone also often experienced a high number of non-council approved businesses.
“I can almost guarantee 80% of indoor recreation owners don’t actually have the appropriate approvals – they just open their doors,” he said.
“But as these businesses aren’t heavy impact ones, they’re probably not going to be on council’s radar immediately.”
Another major zoning sector that can experience establishment difficulties is medical and allied health industries, according to Mr Boulden.
“We have a couple of priority development areas (PDA) on the Gold Coast which are essentially fairly extensive umbrella zoning codes, which gives right of use to a lot of different uses,” he explained.
“However, if you’re outside of a PDA – for example, in a showroom precinct – and you want to operate a general practice or something along the lines of healthcare, you might need a fringe business zoning code.
“However, while this code allows for dry cleaners, showrooms and retail to operate, it doesn’t allow for medical businesses so these people will also need to get a material change of use (MCU) application to allow them to operate.”
3. Heritage listing
Heritage-listed buildings in a commercial zone can still be utilised for commercial purposes, however, tenants planning a fit-out may encounter problems, according to Mr Karavanas.
“The heritage listing of a building does not normally dictate the type of use permissible within that building as this is dictated by the zoning of a site,” he said.
“However, in circumstances where a heritage item has internal significance, even a basic internal commercial fit-out may involve research and documentation to ensure the significance of that item is not undermined.”
Mr Karavanas added that some councils offered incentives for heritage-listed buildings.
“These incentives allow a use that is not permitted in the zone for a heritage building, on the basis that the change of use and associated building works will retain and enhance the significance of the building,” he said.
Who is responsible for checking on a property’s zoning?
It’s up to a commercial tenant, rather than an investor, to check their property’s zoning if they want to make substantial changes to the property.
“The tenant needs to ensure that they’ve investigated, and they understand, what’s permissible under zoning laws,” Mr Boulden said.
However, investors buying a tenanted property should check whether the tenant is permitted to be operating their business under the area’s zoning allowances, Mr Boulden explained.
“While the onus is on the tenant to understand their business’s zoning, investors still need to be across the zoning laws and should know what’s going on with the property,” he said.
“You don’t want to get to a point where you run the risk of losing the tenant because you assume they know what they’re doing.
“But then you realise that they can’t actually operate because they legally can’t be running the business at the property.”
What zoning issues should I consider before buying?
Zoning problems can be avoided altogether by thinking about any changes you want to make to your investment early on, both now and in the future.
“If you’re hoping to improve your investment, develop it or reconfigure it, you need to know what the development code allows and what you can actually do in terms of building improvements,” Mr Boulden explained.
“Whether you’ve got limitations on your site coverage or on heights, your total use area (TUA), your gross floor area (GFA) or carparks, clearly understanding the zoning code, both for existing and future operations, is absolutely imperative.”
Mr Boulden added that it was particularly important for investors to consider the future possibilities for their property and how zoning could effect these plans.
“If you’re planning to develop the property more, what does that development look like?” he said.
“What’s site coverage is permissable under the current zoning?
“What setbacks could you have and how far can you push the button on one of these precedents?
“Can you build up or go wider or get a bigger footprint?”
How do I find out what my commercial zone is?
“It’s worthwhile initally approaching your local council and speaking to a duty planner for clarification,” Mr Karavanas said.
“If council consent is required to manage the process of building changes, I’d recommend engaging a town planner as there can be grey areas between enterprise-use properties such as those between businesses, occupations and industries.”