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The Impact of Urban Planning on Real Estate Development

 | 
June 16, 2024
UPDATED: 
June 16, 2024

The impact of urban planning on real estate development should not be underestimated both in terms of its effect on leasing and sales. At the heart of every city, the processes involved in urban planning have a direct effect on the local real estate market and the quality of life of its residents. 

To ensure that the real estate market flourishes in a particular area, investors need to work with planners to anticipate the community’s needs and ensure that each new development serves its purpose. 

Explore the relationship between urban planning and real estate development in more detail right here. 

What is urban planning?

Urban planning refers to the process of developing and designing urban areas to best meet the needs of the local community. More specifically, it draws on several disciplines, including architecture, economics, public health, finance, and engineering. It is typically used as part of a bigger city plan and should always be linked to the city’s mission and vision statements. 

There are several different types of urban planning, including: 

  • Strategic urban planning 
  • Land-use planning 
  • Master planning 
  • Urban revitalization 
  • Economic development 
  • Environmental planning 
  • Infrastructure planning 

Although these are the main concepts in urban planning, it is important to note that these are not mutually exclusive, and a cohesive urban plan should contain many or even all of the above. 

How does urban planning affect real estate development? 

Urban planning poses challenges and opportunities to real estate developers, so it is important to be aware of these before investing in new real estate. 

Zoning laws 

Zoning laws are intrinsically linked with commercial real estate and are a crucial part of urban planning. These regulations set out how a piece of land can be used in different areas and designate specific zones for residential, commercial, and industrial projects. 

For commercial real estate developers, being aware of and understanding different zoning laws is vital. It is worth noting that zoning laws can change, with new regulations opening up new opportunities and, sometimes, challenges. 

Infrastructure development 

Urban planning also encompasses infrastructure development, which includes transportation systems, utilities, and public services. In terms of real estate development, infrastructure development directly affects the accessibility and aesthetics of commercial properties. 

This part of urban planning also helps to promote investments in green spaces, which can make an area more appealing to prospective businesses and increase the demand for commercial spaces. 

Urban renewal and gentrification 

Urban renewal projects are designed to revitalize underdeveloped areas and deteriorating areas. This poses benefits and challenges to commercial real estate developers. On the one hand, these projects can help increase the value of properties in the area and create more investment opportunities. However, on the other hand, the process of gentrification can cause problems for existing businesses and residents. 

Real estate developers must understand how urban renewal and gentrification can affect the development of new projects so that plans can be made to overcome any obstacles.  

Community engagement and a sense of belonging 

Urban planners are highly invested in creating spaces where local residents and businesses can thrive. This means that community engagement and fostering a sense of belonging are high on their list of priorities. For real estate developers, this means focusing their efforts on building spaces where people can come together. 

For example, CEO Jean Paul Wardy of CenterCal Properties has invested heavily in creating retail spaces that offer people a place to not only shop but also to eat, drink, socialize, and be entertained. This has led to a record 94% occupancy rate in their retail spaces. 

Sustainability and resilience 

As people become more aware of the effects of developments on the environment, urban planners are turning their attention toward green building practices and more resilient infrastructures. For real estate developers, properties that feature eco-friendly features such as energy-efficient heating and cooling systems and green roofs are proving to be popular with tenants who are actively trying to lower their carbon footprint. 

Developments built to withstand the effects of natural disasters, such as floods and earthquakes, are also in demand, especially in regions prone to these types of events. 

Final thoughts

As you can see, urban planning’s impact on real estate development is multifaceted and helps to shape the landscape of commercial properties, both in terms of leasing and sales. From zoning regulations to the impacts of gentrification, the choices made by urban planners directly affect the real estate market and, therefore, need to be seriously considered when investing in a certain area. 

As a real estate developer, you must balance what you need from development with the needs of the city and the quality of life of the community, something which can be achieved by working alongside urban planners. 

Author

  • Chuck Parsons

    Chuck is Score LA’s Executive Director of Events and Marketing. He aims to help business owners and would-be entrepreneurs in Los Angeles improve their business practices.

    View all posts
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