In this video, Brandon Sanders explains one of the most overlooked questions in commercial real estate: occupancy classification. Before you sign a commercial lease in San Angelo, knowing how a space is classified, and how your intended use compares to its last permitted use, can be the difference between opening your business on time and being stuck in a lease for a space you can’t legally use.
By Brandon Sanders, CCIM, Principal & Commercial Broker, Steve Eustis Real Estate
Key Takeaways
- Occupancy classification determines what type of business activity is allowed in a commercial space. It is based on the last permitted use of that space.
- Changing the use of a space, such as turning a former office into an auto repair shop, can trigger updated building code requirements, ADA requirements, and a formal reclassification process before the new business can open.
- The main classifications that come up in commercial real estate are office (business), mercantile or retail, industrial, assembly, and storage. Confirming your category before signing prevents costly surprises after the lease is in place.
In This Video
Brandon walks through why occupancy classification is one of the most important things to understand before signing a commercial lease in San Angelo, and why it often does not come up early enough in the leasing process.
Every commercial space carries an occupancy classification based on its last permitted use. That classification drives several things, including building code requirements, ADA requirements, and what activities can take place inside. For example, a metal building previously classified as office space cannot simply be converted into a truck repair or auto repair shop. The use does not fit the classification, and the space has to be formally reclassified before the new business can operate there.
The main categories that come up in commercial real estate are office (business), mercantile or retail, industrial, assembly, and storage. Knowing which category fits your business helps determine whether a specific space is the right fit, and it also guides the property search by narrowing down which areas of town make sense to look at.
The reason this matters is life safety. Occupancy classifications exist because different types of use bring different levels of density, public access, and risk. That is why confirming a space’s classification before signing is critical. Once the lease is signed, the commitment is made.
Watch the full video above for Brandon’s complete walkthrough.
Frequently Asked Questions – Occupancy Classification
Occupancy classification is how a commercial space is categorized based on its permitted use. It determines what type of business activity is allowed inside and drives requirements such as building code compliance and ADA. Every commercial property in San Angelo carries a classification based on its last permitted use.
It can determine whether a business can legally operate in a space at all. If the intended use does not match the existing classification, a reclassification process may be required before opening, which adds time and cost on top of any rent already owed. Confirming the classification before signing is the only way to avoid that situation.
The main categories that come up are office (business), mercantile or retail, industrial, assembly, and storage. Each one carries its own set of building code and ADA requirements based on density, public access, and the nature of the activity inside.
In many cases, yes. A change of classification or a conditional use can be applied for, but each request is reviewed on a case-by-case basis and may trigger new code or ADA requirements. Understanding what is involved before signing helps make the timeline and cost predictable.
Once the lease is signed, the tenant is committed. A change of classification or conditional use may still be possible, but the process takes time and adds cost on top of rent that is already running. This is why occupancy classification is one of the first questions to resolve, not one of the last.