Auto Dealership Sites Offer High-Density Residential Opportunities

Auto Dealership Sites Offer High-Density Residential Opportunities
Copyright © Urban Land Institute’s Urban Land Magazine 2009. Reprinted with permission.

Evaluating a closed auto dealership for reuse and redevelopment presents unique land use challenges and opportunities. From a land use perspective, there are generally two types of dealerships.

Older dealerships—typically located for decades on small urban properties of one to two acres (0.4 to 0.8 ha) within well-established communities—usually are part of the street front urban fabric and have long-established zoning, land use, and operating permits. Many cities have grown and evolved around auto dealerships, with high-value commercial and residential land uses now located adjacent to the dealership. Commercial zoning on these sites is flexible in some cities, particularly if they have recently amended or updated their general plans and zoning codes to reflect new land use patterns and opportunities for infill, mixed-use, or transit-oriented development.

For example, development standards for infill dealership sites may allow a mix of high density residential, multifamily, and commercial development, with height and setback requirements allowing high density development along commercial corridors. Existing road, water, and sewer infrastructure is often sufficient to support redevelopment of infill dealership sites for such mixed uses. If a property is located near existing or planned transit and public parking facilities, parking requirements may be relaxed. Traffic, circulation, and vehicle-trip counts associated with a change in use from an auto dealership to a mixed-use project may be negligible, minimizing the need for road and traffic improvements.

Though all these factors portend a favorable transition in land use from auto dealership to infill development, potential negative factors associated with such a change include a lengthy entitlement and environmental review process to obtain permits and approvals, and the possibility of community or political opposition to an infill project with increased height and density. In addition, the potential for costly environmental cleanup of contamination associated with underground fuel storage tanks, wastewater clarifiers, service and repair bays, and chemical storage facilities needs to be thoroughly evaluated as part of an environmental assessment and site characterization.

New dealerships—usually located on the suburban edge of development, often are associated with larger auto malls and pose potentially more significant land use challenges for reuse and redevelopment. They typically are located on at least four to five acres (1.6 to 2 ha), and some facilities are as large as ten to twelve acres (4 to 5 ha). These developments emerged in the 1980s and 1990s as communities sought commercial development opportunities on lower-value suburban land to generate sales tax revenue.

Because these sites are often zoned in city general plans for exclusive use as an auto dealership, allowing other commercial or residential land uses requires the strong and sustained will of city political leaders. As is the case with older dealerships, auto malls and their acres of pavement will be replaced by new, higher-value land uses as suburban communities urbanize and land values rise over decades of growth and development.

The decision facing city leaders in the near term is whether to rezone new dealership sites to allow more flexible land uses in an era of dealership consolidation. Many cities that depend on sales tax revenue from auto dealers will resist such a change, instead holding out hope that emerging technologies, such as electric cars, will eventually revive the industry.

The bigger question is whether the automobile industry will ever recover to the degree needed to support the acres of land currently devoted exclusively to dealerships. At the very least, cities will need to create a high degree of flexibility in their land use plans to allow alternative land uses on shuttered dealership sites until the industry has recovered to a degree that its likely future size and scale can be known.

Even with the increased activity triggered by the federal “cash for clunkers” rebate program, the risk of a sustained period of visual and economic blight on these properties seems far too great to allow cities to await a sustained auto sector recovery, especially when the industry is unlikely to resemble in the future what it was in the past.

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