Rezoning.. is it worth it?... What would it take?

Question

Hello All,

I am currently in talks with a potential client. His end goal is to "obtain" a warehouse for his business. He will not be manufacturing any products he will only be warehousing the items he receives till he sells and/or uses them..... notice how I quoted, obtain.

His initial thoughts were to buy undeveloped land and build the warehouse. So the past couple days I have been surfing the web and MLSs trying to find land that would best fit him. However, it has proven to be a difficult task. 99% of the available lands I've come across are zoned residential. The remaining 1% do not line up with his needs.. IF they happen to be zoned industrial.

So, i've come to the following conclusions: a) He will have to lease a warehouse OR b) he will have to rezone.

My current train of thought is to call the counties and directly ask them, what it would take to rezone a parcel. Perhaps even ways to pick out parcels which would have a better chance at getting rezoned..... if such advise even exists.

But anyhow, I wanted to share this with the BP community as well. If anyone has ever gone through the re-zoning process, I would love to hear about your experience and if possible provide me with feedback OR perhaps anyone who could provide any sort of input with regards to commercial leasing, this would be my first rodeo with commercial. I have only done residential till now.

Thank you for you time and considerations. Your support is greatly appreciated.

Isrrael Mendoza

Cason Acor · Answer

@Isrrael Mendoza find a commercial agent that will let you stay on the deal and show you the ropes. I’m co-repping a tenant right now with a residential agent that reached out to me because he didn’t have any commercial experience. I have the knowledge and experience that he needs, and he has the client relationship. He was originally willing to just refer the client to me, but I felt that wasn’t the best option because he’d already invested time in developing the relationship. So I told him I’d share the commission 50/50 with him to stay on, and I’d help him navigate a commercial lease negotiation.

It’s been a great experience thus far and I truly believe we’ll achieve a better result for the client because of it.

Cason Acor · Answer

@Isrrael Mendoza the reason you’re only finding residential land is because you’re looking on the MLS. Before going the rezoning route, you also need to check the commercial listing sites. Most commercial real estate agents don’t use the MLS to market properties. Start with CoStar and CREXI. You should be able to find more options there. I also highly recommend that you don’t attempt to represent your client on a commercial transaction without at least consulting a commercial broker in your market. Asking questions on BiggerPockets won’t be enough to give you the experience you need to best serve your client. Commercial and residential real estate are completely different ball games.

My partner is representing a buyer in a commercial land transaction right now that has a residential agent representing the seller. This woman has 17 years of residential experience but just got herself and her client sued because of several easily avoidable mistakes she made. She thought she had the experience to know what she was doing, and that turned out not to be the case. The last thing you want is for that to be you and open both yourself and your client up to liability.

Matthew Paul · Answer

The problem is time and money .  In my area to get a property rezoned , you first have to grease the wheels of the local politicans . Then you would have locate a property and put it under contract . This could take a couple months to a couple years . Then they hold hearings and the local residents get to have their say . IF you get this far and its shot down , back to square 1 . But you have spent lots of money .  If it does pass you move to engineering , and environmental and building design . Add a year minimum ,  there may be some appeals along the way .   My best estimate if EVERYTHING goes your way 5 years start to finish .

Ronald Rohde · Answer

He needs to lease a building first. Rezoning land to build for his first CRE space? Terrible business decision.

Please have a lawyer review and explain the lease as well. How many sq ft?

Bud Gaffney · Answer

@Isrrael Mendoza not worth it at all.

Isrrael Mendoza · Answer

First and foremost, thank you to all who have replied thus far. Your attention, time, and inputs are much appreciated.

Secondly, @Matthew Paul seems like the cost opportunity is not there. 5 years to achieve rezoning along with a process full of "maybes". Leasing will resolve the majority of the issues if not all the issues.

@Eliott Elias agreed, the few properties I was able to find were much more expensive than what he is in the market for. And as far as bringing on a commercial agent, I'm now thinking I should simply refer him and watch from the sidelines, while questioning the process. However, not sure how willing agents might be to do such thing.

@Cason Acor agreed, however I figured I might as well exhaust my MLS resources. But yes, I did explore other sites such as CREXI, Loopnet, Land.com, LandWatchers.com, etc.... and even then I wasn't able to find much.

However, at the end of the day, I think it might be best to do as you mentioned. Hand this off to some more experienced. I do wish to partake in commercial. So I'll have to come up with a way to get more exposure.

Eliott Elias · Answer

It is rare to find the perfect property, and when you do, you will pay top dollar for it. Surfing the market will give you limited options, most commercial deals are found off market and offered broker to broker. Get a good commercial agent to help you with this.

Rezoning.. is it worth it?... What would it take?

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