A change of use for commercial property usually requires three things: confirming the new use is allowed under local zoning, obtaining building permits for any code upgrades, and securing a new certificate of occupancy before anyone moves in. Title restrictions, leases, and lender terms can block a conversion even when zoning allows it, so they deserve equal attention.

What counts as a “change of use” for a commercial property?

A change of use happens when a building or space is used for a different purpose than the one it is approved for, such as converting office space to apartments, retail to a medical clinic, or a warehouse to a last-mile delivery hub. Local governments treat it as a legal event because different uses carry different zoning, safety, parking, and accessibility requirements.

Even a change that seems minor, like a shop becoming a restaurant, can trigger new approvals.

How do I find out whether my new use is allowed?

Start by identifying your property’s zoning district and reading that district’s use table. Most zoning codes sort uses into three groups: permitted “by right,” permitted only with special approval, and prohibited. Your answer determines which approval path, if any, you need.

A local zoning verification letter or a pre-application meeting with the planning office can confirm the reading. It is worth doing before you sign a purchase contract or a new lease, not after.

What is the difference between by-right use, a special exception, a variance, and rezoning?

A by-right use needs only standard permits. A special exception (called a conditional use in many places) is a use the code allows if specific conditions are met. A variance is permission to depart from the code because of a unique hardship. Rezoning changes the rules for the property itself and is usually the hardest path.

In D.C., the Office of Zoning describes a special exception as “a conditioned, permitted use” allowed if criteria are met to prevent negative impacts. A variance requires showing that strict application of the rules causes “exceptional practical difficulties or exceptional and undue hardship,” that relief would not cause substantial detriment to the public good, and that it is consistent with the zoning regulations’ intent. A use variance (allowing a use the zone prohibits) is generally much harder to obtain than an area variance (relief from setbacks, height, or similar dimensions).

What is a nonconforming use, and can I keep it?

A nonconforming use is one that was lawful when it began but no longer complies with current zoning. It can often continue, but local rules typically limit expanding it, changing it to a different nonconforming use, or restarting it after it has been discontinued for a set period. Buyers should confirm a property’s nonconforming status in writing, because a lapse can be difficult to undo.

Will changing the use trigger building code upgrades?

Often, yes. Building codes classify buildings by “occupancy,” and moving to a classification with greater life-safety demands (for example, office to residential or assembly) can require upgrades to fire sprinklers, alarms, exits, fire separations, structural capacity, and energy systems. Many jurisdictions base these rules on the International Existing Building Code’s change-of-occupancy provisions, as locally amended.

Accessibility matters as well. Under the Americans with Disabilities Act, alterations to the main areas of a commercial facility can require improvements to the accessible “path of travel,” such as entrances, restrooms, and routes, up to a cost that is considered disproportionate: generally 20% of the cost of the alteration to the primary function area (28 C.F.R. § 36.403).

Parking is another common issue. Many codes require more spaces for some uses (such as medical offices or restaurants) than for others, and a shortfall may require a variance or a parking reduction approval.

What else can block a change of use?

Private restrictions can stop a project even when zoning allows it. Before committing, review:

• Title: Deed restrictions and recorded restrictive covenants can limit uses (for example, no residential or no medical use) regardless of zoning.

• Owners’ associations: Commercial and mixed-use property owners’ associations may have their own use rules and approval rights.

• Existing leases: Tenant exclusives, co-tenancy clauses, and use restrictions in current leases can conflict with your plan.

• Loan documents: Many commercial mortgages restrict changes in use without lender consent.

• Environmental conditions: Former industrial, dry-cleaning, or fuel-storage uses can mean contamination, which matters most when converting to residential. A Phase I Environmental Site Assessment under ASTM E1527-21 satisfies the EPA’s “All Appropriate Inquiries” rule and, when done before acquisition, can help preserve certain federal liability protections for purchasers.

Holding the property in its own entity is common for these projects. For more, see: LLC or Corporation? Choosing the Right Structure for Your Small Business.

Are there incentives for converting commercial property?

Some are available, and they change often. As of the date above:

• D.C. Housing in Downtown: a 20-year property tax abatement for commercial-to-residential conversions in an eligible downtown area (expanded in October 2025 to include the Near Northwest Planning Area), administered by the Deputy Mayor for Planning and Economic Development with annual funding caps.

• D.C. Office-to-Anything: a property tax freeze of up to 15 years for converting qualifying office buildings of at least 50,000 square feet in and near Central Washington to non-residential uses such as retail, hotels, or entertainment. Applications are accepted on a rolling basis through September 30, 2030.

• Federal Opportunity Zones: the 2025 federal tax law made the program permanent. States are nominating new zones in 2026, and new designations take effect January 1, 2027. Tax benefits depend on timing and structure, so involve a CPA.

In Maryland and Texas, local programs may be available; the county or city economic development office is a good place to ask.

How does this work in Maryland, D.C., and Texas?

Washington, D.C.

D.C. zoning is governed by the Zoning Regulations of 2016 (Title 11 of the D.C. Municipal Regulations). The Board of Zoning Adjustment hears special exceptions and variances, and the Zoning Commission handles map amendments. The Department of Buildings (DOB) issues certificates of occupancy; where a property is subject to a BZA or Zoning Commission order, zoning staff verify compliance with the order’s conditions before approving one.

Maryland

Maryland zoning is set by counties and municipalities, so the rules depend on where the property sits. In Montgomery and Prince George’s counties, the Maryland-National Capital Park and Planning Commission runs the planning departments and planning boards that guide zoning and development review. Montgomery County’s zoning code sends conditional uses to a Hearing Examiner, and its Department of Permitting Services requires a Use and Occupancy (U&O) certificate before a building or space may be occupied. Prince George’s County adopted a new zoning ordinance effective April 1, 2022, and issues its own use and occupancy permits through the Department of Permitting, Inspections and Enforcement.

Texas

Texas zoning is municipal, and each city issues its own certificates of occupancy. Houston is the well-known exception: it has no citywide zoning ordinance, and the City of Houston notes that where property is not governed by deed restrictions, an owner “may be free to operate a commercial business in the neighborhood.” That makes deed restrictions, which the city’s Legal Department can help enforce, the first thing to check in Houston.

Texas also changed the rules for residential conversions. Senate Bill 840, effective September 1, 2025, generally requires cities with more than 150,000 residents in counties over 300,000 to allow multifamily and mixed-use residential development by right on land zoned for office, commercial, retail, warehouse, or mixed use, with exclusions such as heavy industrial zones and areas near airports and military bases. For conversions of existing buildings, it limits certain traffic study, parking, and utility requirements.

Frequently asked questions

Do I need a new certificate of occupancy if only the tenant changes?

It depends on the jurisdiction. In D.C., a new certificate is generally required for a change of use or occupant load; many Maryland counties and Texas cities also require a new certificate or permit when a new business occupies a space. Check with the local permitting office before signing a lease.

Should I get zoning approval before buying?

Where possible, yes. Many buyers make the purchase contingent on zoning confirmation or approvals, giving them an exit if the new use is not allowed.

Can a restrictive covenant be removed?

Sometimes. Covenants may be released by the parties who benefit from them, may have expired under their own terms, or may be challenged in limited circumstances. Removal is often slow, so budget time for it.

Talk it through with us

The legal path matters as much as the design. We can help you review title, leases, entity structure, and the zoning path before you commit. Learn more about our small business and real estate services.

• Get a free 2-minute estimate: Start your estimate

• Book a $75 consultation: a focused 20-minute introductory session to understand your situation and see whether we’re a good fit. It is not legal advice, and the $75 is credited toward your fee if you hire us. Book a consultation

This article is general information, not legal advice. Reading it does not create an attorney-client relationship.