Does a C1 mixed use zoning REALLY raise the value of a property, as realtors claim? Kensington-Port Richmond.

Asked by Mario, Philadelphia, PA Sun Aug 2, 2009

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Carol Cei, Agent, Maple Glen, PA
Sun Aug 2, 2009
Hi, Mario,

The Somers' answer to your question is fabulous. Pay attention to everything they told you because they are right on the money!

If you are looking for information on values in that area just go to http://www.carolworks4you.com and get a free "market snapshot" sent directly to your email.

Good Luck,

Carol Murray Cei
ReMax Millennium
215-649-1720
carolcei@remax.net
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Chris & Step…, Agent, Philadelphia, PA
Sun Aug 2, 2009
Marlo,

I am not sure what Realtors are claiming but here are my thoughts on the subject.

A Mixed Use property in general may be higher in value than the regular residential row home located in the very same neighborhood. It depends on the location and what the commercial portion is being used for. It is usually greater in value because it can produce 2 or more incomes (depending on how many units there are total in the building). The same applies to a multi-family non-commercial property. Multiple sources of income that create a cash positive outcome is considered a more valuable property for an investor.

BUT... and there is always a but in Real Estate. But, if the Mixed Use property is located under the the EL (an elevated public transportation that we have on Kensington Ave and along N Front St in Philadelphia) it may have less value compared to a Mixed Use Corner along Allegheny Ave. where there are commercial mixed use properties without the noise of the EL.

The condition of the property needs to be taken in to consideration. If the condition of the property is bad then no matter what it is zoned for, the amount of money it will cost to rehab the property needs to be quantified like any other distressed property and then the value assessed.

The USE is important to know regarding the commercial portion of a Mixed Use property and it will impact the value. In Kensington and Port Richmond, the commercial stores are commonly small convenience markets, salons, and bars serving the immediate neighborhood. They typically bring in low rents compared to a higher rental district such as at The Piazza, for example in Northern Liberties, where leases are complex and fit outs are part of the rental negotiations.

Another BUT is regarding financing. In Port Richmond and Kensington many of the buyers are "First Time Home Buyers" looking to use the FHA or PFHA loan products. If the property is zoned commercial on the first floor, then that buyer would not qualify. Commercial zoning requires 20% or so down and many people just do not have the cash for that. In that case a Multi-family without commercial zoning would be and even greater value these days because the First Time Home Buyers would be able to qualify to purchase it.

So your question is a good one but there are many variables that effect the answer.

1) Location
2) Condition
3) Use
4) What the market in that neighborhood can successfully sustain

I hope some of the information I provided will help you determine the right answer to your question.

SS
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