HomeMy WebLinkAboutZTA201000004 Legacy Document 2012-08-14 (3)We, ull
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COUNTY OF ALBEMARLE
Office of County Executive
401 McIntire Road
Charlottesville, Virginia 22902 -4596
(434) 296 -5841 FAX (434) 296 -5800
MEMO
To: Wayne Cilinlberg, Director of Planning
From: Susan Stimart, Economic Development Facilitator
Date: May 4, 2012
Subject: Office Encroachment in LI -zoned parcels
Industrial zoning exists to provide appropriately - priced spaces for these specific functions that
serve our county (R.&D, warehouse, wholesale distribution, and manufacturing) and are critical
to job creation and the overall balance of our economy. If these functions have to compete with
higher priced office -based activities, their ability to locate in Albemarle County is threatened.
Both the County Economic Development Policy and the County's Economic Vitality Action
Plan provide policy and strategy to respond to that need. For example, the County's Economic
Development Policy contains Policy Objective IL "Plan for land and inr astructiwe to
acconnnodate fixture business and industrial growth." The County's Economic Vitality Action
Plan contains Objective IV: "Consistent with the established goals of the County's
Comprehensive Plan, remove obstacles and expand options fa• industrial lard users. " A specific
action strategy of Objective IV is to "Continue Pursuing strategies to stop the conversion of
properties zoned light industry (LI) to conrn:ercirrl, office and other rises that are not `core'
inndusvial uses."
Office encroachment is a circumstance when a stand -alone office user leases space in an
industrial building, thereby creating less space for industrial enterprise which can only locate in
industrial zoning. At a more permanent level, an office use, such as a medical office, is built to
two stories or more on a parcel with industrial zoning; this reduces the land available for future
intended industrial uses in the industrial districts, as two -story buildings cannot easily convert to
industrial uses. Heavy equipment cannot readily be moved to a 2"d or 3`a floor; likewise,
materials movement generally requires ground -level loading dock doors, for access to product
shipment.
Land prices drive the market. Building costs, in comparison, are relatively fixed. If land prices
reach a certain level the total project costs cannot be supported by the market for industrial rents
($8 -1 I /SF). During the height of the real estate boom, land prices were so High for industrially -
zoned parcels that the only returns on investment could be achieved by building higher -value
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uses, such as office, retail or housing. The real estate market demands resulted in some parcels
with industrial designation converting to other land use designations such as affordable housing
and retail - commercial shopping (Willow Glen housing, Avon -5t" Project). According to CBRE
commercial broker, Carolyn Shears, price inflation began even before the real estate boom; as
the smaller industrial parks filled up, such as Mill Creek, Hunter's Way and Hunterstand Court;
property owners began speculating that their parcels were worth more due to scarcity.
As a result, true industrial building users (light - assembly, warehouse, outdoor storage, wholesale,
commercial truck repair, processing, manufacturing, R &D) were forced to locate in more
expensive spaces in the County, or outside of the area. This included BOSS Medical instruments,
Virginia Tile, among others.
As part of addressing the Planning Commission's direction for "increased flexibility" to allow
office in the industrial districts, staff looked at building code requirements as well as current
market conditions. The Virginia Building Code does not provide adequate protections against
"stand - alone" office encroachment as it cannot prevent construction of two -story buildings. Staff
contacted a commercial brokerage firm to assess the current market conditions for industrial
buildings. CB Richard Ellis, a national firm with local offices in the region, conducted a not -yet-
published report of industrial building inventory vacancy and conditions in the region (City of
Charlottesville, Green, Orange and Albemarle counties). From their research, the Albemarle
County industrial inventory has a current (March 2012) vacancy of 8 %. According to CBRE
national reports, 8% is well below the national average vacancy rate for industrial buildings.
More importantly, the 8% industrial building vacancy is lower than the local commercial office
vacancy of 12.5 %. For this reason, staff is recognizing a current (and likely past) local market
shortage for vacant industrial buildings for industry.
To address this shortage, staff recommends allowing "stand- alone" commercial office in the
industrial zoning districts by Special Use Permit. This places the burden on the applicant to
justify the conversion; it also places a higher premium on the office- project costs (SUP
application fee, and several months needed for PC and BOS approvals). The SUP process allows
for a strategic assessment of the benefits and possible negative consequences of converting LI
land to stand -alone office use, within the larger context of the County's economic development
goals. This approach provides the flexibility requested by the Planning Commission but also
enhances the industrial building inventory for local supporting industry such as contractors and
warehouse distribution, as well as targets identified in the April I I'll TJPED Target Markets
report. Such as approach also provides necessary protection for the purposes it is intended to
meet in supporting our overall economy.
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