Red Flag Land Developments – Physical Limitations

It is important to be able to determine early in your screening if a specific parcel may be worthy of further investigation as a potential land development. However, it may be even more important for you to be able to identify fairly quickly those properties on which you should not be spending any time and effort. The problem may be with the parcel itself. On the other hand, it could have been a property having the wrong seller, one that's in the wrong municipality or just bad timing. You could have any combination of factors translating into a "red flag" potential real estate development, ie, one that's not economically feasible or where you would have to grab a tiger by its tail. As the title suggests, this article discusses scenarios where a physical character of the parcel is the problem.

Every real estate parcel can be used for something. The second and third articles in the Land Development Values ​​series discuss how uses are permitted under the current zoning either automatically or upon meeting certain conditions. Those articles also explain when other types of real estate developments may be possible by obtaining some sort of change, such as a variance or a rezoning. Sometimes, however, what is permitted or possible (even if favorable to the type of land development you want to do) becomes almost irrelevant because the land parcel has some incurable physical defect. Here are some examples.

Landlocked Parcels
Municipal zoning and development ordinances typically will not permit a subdivision or development of a parcel (other than a single residential building lot) without the property owners frontage on an existing street. This defect, therefore, can not be "cured" by gaining access to the street by an easement through an adjoining property because an easement does not transfer ownership rights to that land area. It purely gives the recipient some rights to cross over or use that portion of the neighbor's property for a specific purpose over a certain period of time. You've got to purchase adjoining land with a sufficient amount of frontage and tack it onto the parcel you wanted to develop. This could negatively impact the feasibility of the deal.

Too Little or Too Much Frontage
Municipal ordinances usually spell out minimum lot size and width requirements for flag parcels (ie, those with a narrow strip fronting on a street). A land parcel with hundreds of feet of frontage on one or more streets may not be the answer, except your goal is to simply subdivide the property into individual residential building lots without the need for a new road. If you're contemplating a retail or office development and not subdividing, the municipality will probably require improvements along the frontage that could make the ultimate development costly. These could include widening the road along each frontage, installing curbing and sidewalk, relocating existing utility poles, or providing turn-only lanes.

Wasted Land Area
Sometimes the usable portion of a parcel is just not enough because land area is lost (ie, can not be developed) due to physical characteristics such as floodplain, slopes, wetlands, woodlands or other "protected" resources. Common sense dictates that it may be difficult or impossible to achieve an efficient land development layout (one that maximizes the parcel yield while minimizing the cost of horizontal improvements) if the parcel has an irregular shape.

Non-contiguous Land Area
It is not unusual to find parcels with the same owner that are separated from each other by either existing roads or properties owned by somebody else. The amount of contiguous acreage becomes relevant where zoning ordinance provisions specify minimum parcel area requirements for certain land uses.

Suppose you were thinking of buying two parcels from the same owner. Parcel "A" is 20 acres and Parcel "B" is 30 acres but they are across the road from each other. The ordinance requires that a site developed into a particular use have at least 50 acres. The seller's property may consist of a total of 50 acres, but for purposes of determining if it meets the site area requirement, it will be treated as two separate parcels. So unless you were able to purchase enough land adjoining either "A" or "B" to have contiguous land area of ​​at least 50 acres, the type of real estate development that you wanted to do would probably not be possible.