As momentum in the commercial real estate (CRE) transactions market continues to recover from the 2023 and early 2024 slowdown, zoning report volume is on the rise, with normalized volume in LightBox’s PZR Report zoning analysis increasing by 20% last year and another 12% in the first two months of 2025. A zoning report is a foundational tool in CRE, influencing everything from site selection and valuation to regulatory compliance and investment strategy. As the CRE recovery progresses, adaptive reuse is a leading trend in response to shifting demand. Zoning reports play a key role in the fundamental transaction underwriting process for all financed deals in ensuring that the current or envisioned objective of the property is legal under municipal code. In cases where a buyer is planning on changing or adjusting the use, it can be a significant factor in identifying underutilized properties that may be strong candidates for rezoning or redevelopment, and for determining the bounds for the permitted use envisioned by the investor (e.g., number of beds, number of units, amount of rentable square footage, etc.). An analysis of our transactional data has allowed us to create industry benchmarks in the zoning sector to identify interesting trends about CRE investment and development.
Self-Storage, Hospitality Lead Year-Over-Year Growth
An analysis of LightBox data revealed that organic growth in zoning report volume was 20% in 2024 over 2023. The strongest growth came from self-storage facilities, where demand for zoning reports nearly doubled year over year. The hospitality, multifamily, and office sectors led the next tier of strong growth with annual increases of 37%, 29%, and 29%, respectively.
Annual Growth in Zoning Report Volume:
U.S. Total and by Property Type
2024 vs. 2023
Multifamily and Self-Storage Account for Growing Share
As a share of total zoning report volume in 2024, multifamily was the leader, accounting for 29% of 2024’s total, a 1.9% increase over 2023’s share. Multifamily is one sector in CRE that is poised for what GlobeSt just described as “the best buying opportunity in years,” due to strengthening fundamentals, pent-up investor demand, and a limited supply environment that is driving higher rent growth.
Self-storage, with an 8.2% share of total volume last year, increased its share by 3.2% over 2023. This year could be challenging for self-storage development activity, however, with construction starts forecast to contract by 20% compared to 2023, according to Yardi Matrix.
The office sector is also showing promising signs of unlocking with office deals taking a 0.5% larger share of 2024’s deals. It’s also worth noting that in the second half of 2024, office accounted for 10% of all deals versus only 7% in the first half.
Share of Zoning Report Volume by Asset Class
2023 vs. 2024
Early 2025 Trends Point to Robust Zoning Report Demand
If the first two months of 2025 are any indication, growth in zoning report volume will continue its upward trajectory this year with total volume up by 12% compared to January and February 2024.
Industrial is showing a dramatic turnaround this year, with the share of project volume in the first two months increasing from only 4% to 23% of total volume compared to the same period last year. Given the dramatic need for industrial space to support e-commerce, logistics, and manufacturing space, investors and developers are actively seeking opportunities in the industrial sector, particularly in response to structural shifts in supply chain dynamics and onshoring as the tariff wars unfold.
“The industrial sector’s resurgence is being fueled by both near-term demand and long-term structural shifts,” said Michael Fraser, SVP of Risk and Due Diligence at LightBox. “With companies reshoring operations and modernizing supply chains, we’re seeing a surge in investment and development activity, particularly in key logistics hubs and secondary markets positioned for growth. Additionally, big portfolios are starting to move within formerly sleepy sectors as the old financing packages are coming due.”
Retail zoning projects are also showing strong early-year growth with the share of total volume increasing from 7% to 11% of the total. The retail sector is benefitting from a resurgence of investor interest, particularly for open-air neighborhood shopping centers or live-work-play redevelopment. CBRE predicts that more than $10 billion in U.S. open-air retail portfolios will be bought and sold in 2025, and investors are already actively forming partnerships to acquire portfolios of strong retail assets in growing markets.
Year Over Year Changes in LightBox PZR Zoning Report Volume by Asset Class
(Percentage share of total volume)
A Look Ahead
Macro trends across CRE are expected to drive strong demand for zoning reports this year as demand grows, particularly in multifamily, self-storage, and industrial. The YTD 12% increase in PZR reports suggests a strong year ahead due to new development and investment in growth markets. “Large transactions will continue to move, but some sellers who planned to divest properties late last year are reconsidering amid price uncertainty, opting for refinancing instead,” noted Fraser. “It will be interesting to see whether banks expand their real estate lending as the year progresses.” In sectors like office and retail, in particular, zoning reports will be critical as developers eye sites for rezoning into new uses that are more in line for today’s tenants. Demand will also grow as local and regional planning policies shift and trigger updates to zoning laws to attract investment and development to particular communities.
For more insights on zoning data and trends, subscribe to Insights and the CRE Weekly Digest Podcast for regular updates and real-time data.
Subscribe To Insights
Be the first to get the latest news, updates and insights from LightBox.
