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Land Use Zoning: How Can It Affect Your Business?

land use zoning

If you’re looking to open up a physical store or change business locations, land use zoning can be an important consideration for your business plan and growth. You may have heard of zoning classifications, such as R1, B1, B2, etc, but what do they really mean for your business? Land use zoning can help you understand the location you wish to operate in. It can also shape the way your business operates, as certain zones must follow certain regulations. This means that the zoning type you choose can shape your businesses operations. Read on for more.

What is Land Use Zoning?

Land use zoning is an important planning control mechanism that regulates the use and development of areas of land. In general, land use zoning splits up areas of land into different classifications, called zones, to meet specific purposes. For instance, some areas of land are residential areas, whether as others are commercial or environmental areas.

For business owners, opening up a physical store within the correct land zone is key to the functionality of your business. There are many different zones a business owner can operate within. So, deciding on which zone is the correct zone isn’t always an easy task.

Furthermore, each zone has its own specific regulations and rules. These regulations could relate to things such as noise restrictions, environmental requirements, size of the building, hours of operation and much more.

Each local government area has its own land use zoning regulations. To determine what zoning type applies to your property, click on the Tool.

Why is Land Use Zoning Important For Your Business?

As noted above, there are different regulations and rules that relate to each type of land use zone. Therefore, it’s important to understand the different types of zones to better understand how your business will operate in each zoning area.

Don’t worry, you don’t have to start from scratch. When you buy a new property, or develop land, you will receive a 10.7 Planning Certificate. This certificate outlines which planning laws apply to your property, what zone your property operates under, as well as what you can and cannot do within that land zone.

It’s important to choose the right zone for your business to optimise your market growth and get a bang for your buck. Below, we outline the different zoning types a business can operate in, as well as their regulations and rules, to help you make an informed decision when planning to buy or redevelop your businesses property.

Different Types of Zones

Residential Land Use Zoning

Residential dwellings

A residential zone is basically an area or location where residents and private dwellings are allowed. It is important to note that there are a few different types of residential zones. For instances, there are R1, R2, R3, R4, R5 zones. Each zone simply correlates to the density of houses permitted in a certain location.

There are many residential zones that permit ‘single neighbourhood shops’ to operate within that residential area. A single neighbourhood shop is a business that is not attached to a house or residence.

These neighbourhood shops are usually small-scale convenience retail businesses, community centres, child care centres and places of worship. Of course, the major benefit to opening up your business within a residential area is the high proportion of residence and the low proportion of nearby stores.

However, residential areas are not permitted to become too saturated by businesses. So, only businesses that will service the day-to-day needs of residents that live within that area will be able to operate within a residential zone.

Therefore, if you’re a larger business, it’s best to steer clear of opening up shop in a residential zone.

Business Land Use Zoning

Business zones are the most popular areas in which business owners will decide to place their physical store. However, it can get confusing when there are so many zoning options to choose from. In total, there are 8 different types of business zones. However, only the most popular business zones will be outlined below.

B1 – Neighbourhood Centre Zone

The B1 zone allows a range of small-scale retail, businesses and community stores to operate within this area. This zone is quite similar to the residential zone in that it will only cater for smaller style businesses. The types of businesses that usually operate in the B1 zone are:

  • Small businesses,
  • Medical centres,
  • Small-scale convenience/retail stores.

It is important to note that the B1 zoning area do not usually permit ‘single neighbourhood shops’, only ‘shop top housing’ is permitted within this zone. So, if you’d like to open up a store without a residential dwelling on top of your business, you might want to consider a different land zoning classification.

B2 – Local Centre Zone

This zone is the most common zone for local/town centres in NSW. In general, each local government area will have its own town centre. More likely than not, it is operating as a B2 type zone. Therefore, the B2 local centre is the ‘hub’ of any local government area. A variety of shops can operate within a B2 local centre zone. This usually includes:

  • Office premises,
  • Entertainment facilities,
  • Function centres,
  • Retail stores and convenience stores,
  • Tourism and accomodation,
  • Education establishments

The B2 zone is basically the extended version of the B1 zone. However, the stores are permitted to be stand alone stores. Therefore, there is no need for residential dwellings to be on-top of B2 types businesses.

The advantage to running your business within the B2 zone is that your business will be catering to many local residents. The B2 area is the centre of the town, so residents and tourists alike tend to frequent their B2 areas.

B3 – Commercial Core Zone

Shopping centre

The B3 zones usually apply to major metropolitan areas, large town centres or regional centres. It is common for B3 zones to have major shopping centres that can cater to extensive commercial and retails needs of their many residences. The B3 zone is one of the most populated business areas because they are connected to high density residential areas. Within the B3 zone, a range of businesses may operate including:

  • High density of retail and commercial stores,
  • Large-scale offices and businesses,
  • Large-scale entertainment facilities.

B5 – Business Development Zone

This zone is used to catered for warehouse businesses and bulky goods retail stores that need large floor areas to operate effectively. This means that the usual businesses that operate within the B5 zone are:

  • Warehouses,
  • Distribution centres,
  • Bulky goods premises,
  • Hardware and building suppliers,
  • Landscaping material suppliers,
  • Garden centres.

If you’re a warehouse type business, then you’ll need to make sure you’re operating within a B5 zone. Your local Bunnings Warehouse will be placed within a B5 zone in your local government area. In general, small-scale retail and commercial stores are not allowed to operate in a B5 zone.

B8 – Metropolitan Centre Zone

This zone only applied to the City of Sydney and Northern Sydney government areas. The B8 zone was created to reflect the unique business landscape of Sydney City. This zone is one of the most diverse land zones out there, allowing a range of businesses to operate within its area, including:

  • Commercial premises,
  • Function centres,
  • Educational establishments,
  • Entertainment facilities,
  • Recreation facilities,
  • Registered clubs,
  • Tourism and accomodation,
  • Child care centres,
  • Community facilities.

Key Takeaways

Of course, operating your business in the correct land use zone can affect how our business operates, your consumer outlook and your marketability. If you’re looking to cater to residents without having a great deal of competition, you may consider opening up in a B1 or residential zone. However, if you wanting to reach a large scale of consumers you may consider a B3 and above zoning classification. It all depends on what your business needs are and who your consumers are.

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