How Raleigh's mixed-use zoning shapes commercial land value

A buyer who plans to redevelop prices land on what can be built there: how many homes or how much floor area, at what height, with what street-facing requirements. In Raleigh those answers are set by the Unified Development Ordinance (UDO). Sec. 1.3.1 establishes residential, mixed-use and special districts but no stand-alone commercial or office district, and under the use table in Sec. 6.1.4 office and retail uses are allowed mainly in the seven mixed-use districts. Reading their designations explains much of why one site trades above another.

Under UDO Sec. 3.1.2, a mixed-use district is built from a base district (RX-, OP-, OX-, NX-, CX-, DX- or IX-), a height designation (-3, -4, -5, -7, -12, -20, -30 or -40), which every mixed-use district must carry, and an optional frontage (-PK, -DE, -PL, -GR, -GP, -UL, -UG or -SH). A designation such as CX-5-UL therefore means Commercial Mixed Use, five stories, Urban Limited frontage. A trailing -CU marks a conditional district (Sec. 1.3.2).

Overlay districts, such as the Transit Overlay District, are established separately in Sec. 1.3.3, and in the City's zoning data they are mapped as their own layers rather than as part of the base designation, so they have to be checked separately.

The intent statements in Sec. 3.1.1 and the use table in Sec. 6.1.4 decide whether housing is on the table. Multi-unit living is permitted in RX-, OX-, NX-, CX- and DX-. In IX- it is a limited use: to help reserve land for manufacturing and employment, residential uses are limited to the upper stories of mixed-use buildings. OP- is intended to preserve and provide land for office and employment uses, and the use table does not permit multi-unit living there. NX- has a maximum lot size of 10 acres.

To a multifamily developer, an OP- parcel is therefore a different asset from a CX- or OX- parcel of the same size, even with similar office buildings on both.

Sec. 3.3.2 sets the maximum height for each designation in stories, and for the three lowest designations in feet as well: -3 allows three stories and 50 feet, -4 four stories and 68 feet, -5 five stories and 80 feet. The -7, -12, -20, -30 and -40 designations allow that many stories. Where an urban frontage applies, the -7 and higher designations also require a minimum height along the street-facing facade.

All else equal, more permitted stories means more buildable units or floor area per acre, and that is often one of the largest drivers of the difference between two otherwise similar sites.

Frontages, described in Sec. 3.4.1, control site layout. -PK requires a heavily landscaped buffer between the roadway and the development. -PL permits at most two bays of on-site parking with a single drive aisle between the building and the street. -GR, -GP, -UL and -UG do not allow parking between the building and the street, and -SH is intended for main-street conditions where mixed-use buildings are the primary building type allowed. Where frontage and base dimensional standards conflict, the frontage controls.

Frontage changes what can be built efficiently: a landscaped buffer can reduce usable area, and an urban frontage rules out a front parking field.

The Transit Overlay District (-TOD) is set out in UDO Sec. 5.5.1. The City has said it intends to apply it mostly to property along its bus rapid transit corridors that is already zoned for commercial and multifamily development. In mixed-use districts it allows height in stories to increase by 50 percent when the added stories are used for residential uses and at least 20 percent of the units in them are affordable to households at or below 60 percent of area median income for at least 30 years, or by 30 percent for buildings with no residential use. It also sets a two-story minimum for most principal buildings and prohibits uses including vehicle sales, car washes, self-service storage, and warehouse and distribution. An existing use that the overlay makes nonconforming may generally continue, but under Sec. 5.5.1 it cannot be expanded without a special use permit from the Board of Adjustment. For an owner whose site hosts one of those uses, the overlay can add redevelopment potential while limiting the existing business.

Under Sec. 3.7.1, the Frequent Transit Development Option lets RX-, OX-, NX-, CX- and IX- property zoned for three stories, with at least part of each lot inside the mapped Frequent Transit Area, build Apartment or Mixed Use buildings containing residential uses up to five stories and 80 feet with the same affordability commitment. That bonus does not apply in the -TOD or in a mapped BRT Area.

Other overlays listed in Sec. 1.3.3, including watershed protection, historic, neighborhood conservation and special highway overlays, can add constraints. And under Sec. 1.3.2, a -CU district follows its base district's rules unless the adopted conditions are more restrictive, so a CX-7-CU parcel may be limited in units, height or uses in ways the designation alone does not show.

Consider a hypothetical. One six-acre parcel is zoned OP-3-PK: office and employment uses, no multi-unit living, three stories, a landscaped parkway buffer. Another six-acre parcel is zoned CX-7-UL inside the -TOD: housing permitted, seven stories before any bonus, an urban frontage. Both might be improved with similar older office buildings and carry similar assessed improvement values. To a residential or mixed-use developer, the second parcel supports far more buildable area, and its land would generally be priced accordingly. The improvements matter less than the designation underneath them.

Much of this can be checked from public sources.

Raleigh amends the UDO often, so confirm the current text of the sections that apply to your parcel before relying on them. If your site is 3.0 to 15.0 acres and sits in a district that allows housing, Hardgate Capital reviews submissions directly; a principal reads each one within 24 hours, and submissions are handled as described in our Privacy Notice.

This article is general information, not legal advice.