Houston is well known as the only major U.S. city with no formal zoning code. Such a seeming lack of order is difficult to grasp by those unfamiliar with the area. The absence of a comprehensive land use code conjures up images of a disjointed landscape where oil derricks sit next to mansions and auto salvage yards abut churches. To some degree these anomalies exist, yet for the most part Houston is like any other large North American city.
What is unique about Houston is that the separation of land uses is impelled by economic forces rather than mandatory zoning. While it is theoretically possible for a petrochemical refinery to locate next to a housing development, it is unlikely that profit-maximizing real-estate developers will allow this to happen. Developers employ widespread private covenants and deed restrictions, which serve a comparable role as zoning. These privately prescribed land use controls are effective because they have a legal precedence and local government has chosen to assist in enforcing them.
Some investors are understandably apprehensive about the lack of clearly defined rules. Houston developers have long recognized these concerns and have responded, particularly in suburban markets, by producing planned business and industrial parks that have rigorous covenants and deed restrictions. Not surprisingly, the sites receiving the attention of institutional investors, especially in suburban markets, tend to be in planned parks.
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