Three Ways Columbus’ Newly Adopted Zoning Code Impacts Commercial Real Estate
Columbus City Council officially adopted changes to the city’s zoning code in July. The change marks the first significant evaluation and reformation of the prior code in more than 70 years. The years-long effort culminated in a unanimous vote for all six resolutions and the legislation is slated to take effect on August 28. As a result, six mixed-use districts were created along key corridors of the city, incentivizing the development of up to 88,000 housing units. Here’s what the change means for commercial real estate.
Eliminating Parking Requirements, Relaxed Density and Height Restrictions Make Development More Cost-Effective
The Columbus region is experiencing a housing shortage. A 2017 study conducted by Vogt Strategic Insights on behalf of the Building Industry Association of Central Ohio evaluated the region’s housing needs through 2050 and found that the region needs to build 14,000 housing units annually through 2050 to meet the needs of the growing Columbus region. Between 2010 and 2021, the Columbus MSA has averaged 8,214 permits per year, according to the report. This challenge has been exacerbated following the announcement that Intel would build its campus in the region bringing the estimated population growth in the region to nearly 3 million by 2050.
Additionally, the post-pandemic challenge of rising labor and construction costs paired with high interest rates has also proven to be an obstacle for developers as of late. High costs have been prohibitive to development, adding to the lag in building the needed housing supply.
The relaxation of density and height restrictions and the elimination of parking requirements will allow developers to build more units per parcel, making projects more cost-effective and supporting faster construction.
More Affordable Units Support the Region’s Economic Health
As a result of the shortage of housing, the region’s affordability is also in jeopardy, with the annual growth rate in home price being more than three times the compounded annual growth rate in the median household income, noted the BIA report.
Furthermore, last year rent growth in the region grew by 3.8%, the third highest jump in the nation behind New York City and northern New Jersey, according to Yardi Matrix.
The changes to the zoning code allow developers that include affordable units to build even higher. This ability to build denser, higher buildings will help encourage the development of more affordable units by making those projects more cost-effective.
The addition of these units also supports the region’s workforce through retention and by proximity to and support of mass transit. In addition, the development of mixed-use districts fosters the creation of walkable, urban centers which fuel small business growth and encourage retail and office development.
Removing Obstacles Creates Equity
The prior code was written in the 1950s, long before the Columbus region grew to what it is today, and it lacked specificity and left much to interpretation. This meant that the city relied “heavily on project-by-project negotiations, variances and rezoning to get new projects approved,” according to the Zone In Columbus website.
The new code will include specific details, including the intention for the district, as well as diagrams illustrating setbacks, facades and more, providing developers with clarity about what is and isn’t permitted. Bottom line, this too will reduce time and expense, facilitating faster development and providing more developers the opportunity to get projects off the ground.
