What Is Commercial & Industrial Land Use?

October 5, 2018

Commercial land is a distinct category of investment properties that are meant to be income-producing. Commercial land is appraised differently than residential land and also treated differently by municipalities and infrastructure providers. The value of residential real estate tends to rise every year but commercial land can fluctuate wildly based on where it is located and what other properties are located (or going to locate) nearby.

Identification of Commercial Land

Commercial land can be any plot or section of land used for commercial purposes and intended to generate a profit. This means that the land hosts warehouses, industrial property, retail stores, parking lots, malls, hotels, office buildings, and medical centers. Apartment complexes and other profit-generating residential properties are also considered commercial land. Raw, undeveloped rural land or infill land in the path of future commercial development also fall under this category.

Zoning Laws

Zoning laws are in place to prevent conflicts between businesses and residential homeowners. Municipalities will determine if the land is residential, commercial, agricultural, or public. Zoning variances can change the designation of a property based on special circumstances. For instance, a shop can be zoned commercial even if the owner is living on the property. In such a situation, the municipality can consider redesignating the land if the business closes. Residential land can also be considered mixed-use if it serves both residential and commercial purpose, such as when a small business is located on the property.

A complex part of commercial land and zoning is getting the land rezoned. Denver commercial properties are seldom located in the middle of residential areas. Commercial buildings, street lights, parking lots, and traffic could impact the value of residential land, and that’s why city planners encourage businesses to be located along central downtown areas and busier streets.

Take this example; an investor wants to build a mall on a vacant lot next to a Denver highway, but the land is adjacent to a residential neighborhood. In this case, the zoning change could be refused because allowing a mall right next to homes would adversely affect homeowners.

Tax Rates

Property tax rates for Denver commercial real estate are set higher than what applies for residential or other types of properties. This is because business owners are considered to be using land that is within the municipality’s boundary to generate a profit. As such, higher tax rates are imposed on the business due to the fact that the profit-making venture is made possible by the county, city, or town. Contact Unique Properties, Inc. today to learn more about Denver commercial properties and how we can help you in your search for the optimal commercial land.

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