Commercial Real Estate in Clayton: Town Center, LC and PAO Zoning and Planned Development

By Matthew Martinez, Founder, CEO & Managing Broker, Diamond Real Estate Group. California DRE #01869679.

Clayton is a small, mostly residential city at the foot of Mount Diablo, and its commercial land is limited. Most of it is concentrated in the historic Town Center along Main Street and Clayton Road, with a few office and neighborhood retail sites along Clayton Road and Marsh Creek Road. With so little supply, the specific rules on each parcel decide what you can do, so confirm the zoning and any Town Center Specific Plan designation with Clayton’s Community Development Department before you commit.

Who controls the parcel

The City of Clayton zones land inside city limits under Title 17 of the Clayton Municipal Code. Land outside the city, including the open space and ranch land toward Marsh Creek and Morgan Territory, is unincorporated and falls under Contra Costa County. Many "Clayton" mailing addresses on Marsh Creek Road are county parcels. Inside the city, three layers can apply to one site: the base zone, the Town Center Specific Plan if the parcel is inside its boundary, and a Planned Development (PD) rezoning if the site was approved as an integrated project.

Clayton zoning for commercial, office and mixed use

Clayton’s commercial code is short. It has two commercial base districts, plus PD.

District	Intended uses	Notes
LC Limited Commercial (outside the Town Center)	Neighborhood retail and services, enclosed restaurants and cafés, medical, dental, professional and financial offices, studios, business schools	5,000 sq ft minimum lot, 40 ft height. 5 ft setbacks, 10 ft next to residential, reducible to zero through site plan review
LC inside the Town Center Specific Plan	Uses listed under the plan’s Town Center Commercial designation: retail, commercial services, restaurants, bars, commercial recreation, offices, upper-floor residential and lodging	Plan design guidelines also apply
PAO Professional Administrative Office	Professional offices, studios and galleries, broadcast studios, pharmacies accessory to a clinic	No merchandise stored or sold on site. 10,000 sq ft lot, 35% coverage. 35 ft, or 20 ft within 50 ft of single-family zoning
PD Planned Development	One use or a mix of uses set by the General Plan designations on the site	Minimum ½ acre. Required for any mixed-use project

The PAO district expressly excludes retail and wholesale sales and a list of trades, including barbers, beauticians, printers, morticians and veterinarians. The Planning Commission can exclude similar occupations. A buyer hoping to put a salon or a vet clinic in a PAO building should plan on a rezoning, not a tenant improvement.

The Town Center and Main Street

The city describes the Town Center Specific Plan as its tool for encouraging appropriate commercial development while enhancing the area’s historic character. The plan identifies land uses and sets design guidelines for buildings, walkways, parking lots and landscaping. The city also posts a Town Center parking study that examined changing off-street parking standards for commercial uses.

The Town Center rules were last reshaped by the Town Center and Vicinity Planning Amendments. Clayton adopted them with a mitigated negative declaration, and the notice of determination on CEQAnet is dated February 2007. Those amendments:

added parcels to the specific plan area so its design guidelines apply to future development there;
allowed commercial buildings to cover up to 100% of a parcel, depending on parcel size, and relaxed setbacks;
set a uniform 40-foot height maximum in the Town Center;
added citywide parking standards to the zoning ordinance;
realigned the general plan, specific plan and zoning designations on affected parcels, including a former fire station site at Clayton Road and Mitchell Canyon Road.

Full lot coverage and a 40-foot height make Main Street infill feasible on small lots, but the design guidelines still govern how a building looks.

Planned development, lodging and other local rules

PD rezoning. Under Chapter 17.28, land of half an acre or more can be rezoned PD, and a mixed-use project must be rezoned PD before approval. Commercial or mixed-use projects under 15,000 square feet go through a site plan and/or use permit. Projects of 15,000 square feet or more need a development plan permit. The Planning Commission holds the hearing, and appeals go to the City Council. The approving body must find the PD gives a significantly better result than standard zoning. Construction must start within 24 months or the approval lapses, with one-year extensions possible.

Lodging. Clayton’s transient occupancy tax is 4% of rent for stays of 30 consecutive days or less. Visitor lodging is listed among Town Center Commercial uses.

Marsh Creek Road. The city’s Marsh Creek Road Specific Plan covers about 475 acres southeast of Clayton and aims to keep rural character, open space and upscale housing. It is not a commercial growth area.

Transfer tax, business tax and property tax

The Contra Costa Clerk-Recorder charges the county documentary transfer tax of $0.55 per $500. Clayton’s code also has its own real property transfer tax, adopted under the state Documentary Transfer Tax Act. It is $0.275 per $500 of value, excluding remaining liens, and the County Recorder administers it. The Recorder’s page does not list Clayton among the cities with an additional tax, and under the state act a city tax at half the county rate is generally credited against the county tax rather than added to it. Confirm with the Recorder how a Clayton deed is taxed. Clayton’s business license taxes are in Chapter 5.04. We did not verify the rates. A sale is generally a Proposition 13 change of ownership.

Due diligence that matters in Clayton

Start with our commercial due diligence checklist, then add:

Confirm the parcel is in the city and not unincorporated county.
Check whether it is inside the Town Center Specific Plan boundary, which changes the LC use list.
In PAO, check the tenant’s use against the excluded trades.
For mixed use, budget for a PD rezoning, a development plan permit and the 24-month start deadline.
Review the Town Center design guidelines and parking standards before pricing an expansion.
Ask the Recorder how the Clayton transfer tax is applied on your deed.

Questions people ask

Can I put a salon in a Clayton office building?

Not in the PAO district. It excludes beauticians and barbers, along with retail sales. LC allows neighborhood services.

What is the height limit in downtown Clayton?

The Town Center amendments set a uniform 40-foot maximum, and the LC district also allows 40 feet.

Do I need a PD rezoning for a mixed-use project?

Yes. Clayton requires mixed-use development to be rezoned Planned Development before approval, on sites of at least half an acre.

Are bars allowed in Clayton?

Inside the Town Center, the Town Center Commercial designation lists bars. Outside it, the LC list covers enclosed restaurants and cafés.

What is Clayton’s hotel tax?

4% of rent for stays of 30 days or less.

Does Clayton have a transfer tax?

Its code imposes $0.275 per $500, administered by the County Recorder. Confirm whether it is credited against the county tax.

Does Diamond handle commercial property in Clayton?

Contact Matthew Martinez to discuss buying, selling or leasing commercial property in Clayton.

Sources & notes

Clayton Municipal Code (GoCodebook, 2026-10 edition): Chapters 17.24, 17.28, 17.32, 3.20, 3.28 and 5.04
City of Clayton, Long-Range Planning (General Plan, Town Center Specific Plan, Marsh Creek Road Specific Plan)
CEQAnet, Town Center and Vicinity Planning Amendments (SCH 2006082033)
Contra Costa Clerk-Recorder, Documentary Transfer Tax

Note: The Town Center Specific Plan PDF itself was not opened, so its land use map and design guidelines were not reviewed. Business license tax rates were not verified.

This page is general information, not legal or tax advice. Last reviewed October 2026 by Matthew Martinez.

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