Commercial Real Estate in Petaluma: Mixed-Use Zones, Business Parks and the City Transfer Tax

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

Petaluma’s commercial property sits in the historic downtown along the Petaluma River, the mixed-use corridors such as Petaluma Boulevard and Washington Street, the shopping centers on the east side, and the business parks and industrial land near Highway 101 and the airport. The city writes its own zoning code and, with Santa Rosa, is one of only two Sonoma County cities that add a city transfer tax at recording. Confirm zoning, permits and tax with the City of Petaluma before relying on this page.

Who controls the parcel

Inside city limits, Title 21 of the Petaluma Municipal Code is the zoning ordinance; in October 2026 the code was posted as current through Ordinance 2931 NCS, passed July 6, 2026. Outside the city line, ranches, dairies and rural businesses fall under Permit Sonoma and county plans, including the Petaluma Dairy Belt and West Petaluma Area Plans. A Petaluma mailing address does not prove a parcel is in the city, so check the county parcel record. For countywide context see our Sonoma County commercial guide.

Petaluma zoning for commercial, industrial and mixed use

Section 4.020 describes each zone and its intensity limit.

District	Intended uses	Notes
C1 Commercial 1	Smaller shopping centers and neighborhood storefronts	Maximum FAR 0.8
C2 Commercial 2	Community and regional shopping centers	Maximum FAR 1.2
MU1A Mixed Use 1A	Pedestrian-oriented ground-floor retail or office on corridors next to residential zones	FAR 2.5; housing up to 30 units per acre
MU1B Mixed Use 1B	Same mix on larger parcels along major arterials	FAR 2.5; 30 units per acre
MU1C Mixed Use 1C	Lower-intensity mixed use on smaller West Petaluma parcels	FAR 2.5; 30 units per acre
MU2 Mixed Use 2	Downtown and adjacent blocks, matching the historic downtown’s form	FAR 2.5; 30 units per acre
BP Business Park	Offices, technology, R&D, light industrial and visitor services; retail secondary	FAR 1.5, or 3.0 when all required parking is structured
I Industrial	Manufacturing, processing, warehousing and distribution; small restaurants as ancillary uses	Maximum FAR 0.6
FW Floodway	Land in a mapped floodway	Development rules in Chapter 6
PUD and PCD	Existing planned districts with their own standards	No new PCDs; nonresidential PCDs in place on May 19, 2008 are recognized

Downtown, the corridors and the business parks

Downtown (MU2). The MU2 zone covers downtown and nearby blocks and aims to keep new buildings in step with the historic commercial core. With a 2.5 FAR and up to 30 homes per acre, it is the zone where an upper-floor apartment or office conversion over a storefront is most likely to fit. Older downtown buildings can also raise historic review and seismic questions, so ask the city early whether a project triggers either.

Mixed-use corridors (MU1A, MU1B, MU1C). The three MU1 subzones share the same 2.5 FAR and 30-unit density cap but differ by setting: MU1A sits next to neighborhoods, MU1B on big arterial parcels, and MU1C on small West Petaluma lots where the code calls for limited intensity. A buyer comparing two corridor sites should confirm which subzone applies, because use tables and site standards follow the subzone.

Shopping centers (C1, C2). C1 is the neighborhood tier, capped at 0.8 FAR, and C2 the community and regional tier at 1.2. Neither cap suits dense redevelopment without a rezoning or a state housing law path.

Business park and industrial (BP, I). BP is the city’s office, R&D and light industrial zone, and it doubles its FAR to 3.0 if all required parking goes into structures. The I zone is lower intensity at 0.6 FAR and is meant for manufacturing, processing and distribution, with only small restaurants and service uses allowed alongside.

Petaluma-specific rules: fueling stations, floodway and planned districts

Fueling stations. The ordinance the city adopted March 1, 2021 amended zoning Chapters 4, 11 and 22 and added Section 22.035, which regulates fueling stations as nonconforming uses and structures. Anyone buying a gas station, or a site for one, should read that section and confirm with Planning what expansion, rebuilding or conversion is allowed.
Parking. The same 2021 ordinance amended Chapter 11’s parking, bicycle and loading rules, so older approvals may not match current standards.
Floodway. The FW zone applies the floodway rules in Chapter 6. Parcels near the Petaluma River and its tributaries should be checked against both the zoning map and FEMA maps.
Planned districts. PUD and PCD parcels follow their own adopted standards, not the base zone table, so get the governing PUD or PCD document before underwriting.
Housing above shops. Apartments in a mixed-use building are rental housing under the city’s tenant protection chapter, discussed on our Petaluma multifamily page.

Transfer tax, business tax and property tax

The Sonoma County Clerk-Recorder charges documentary transfer tax at $0.55 per $500 of value, calculated after deducting loans the buyer assumes.

City transfer tax. Petaluma adds $2.00 per $1,000 of value, collected with the county tax at recording. Unlike the county tax, the city tax gives no deduction for assumed loans. Together that is $3.10 per $1,000 on a sale with no assumed debt.

Declaration. The deed must state how the tax was computed and name the city or "unincorporated," signed by the grantor. Common exemptions, such as certain trust transfers and dissolution transfers, must be stated on the document.

Property tax. A purchase is generally a change in ownership under Proposition 13, so budget for reassessment to the price. We did not verify Petaluma business license tax rates.

Due diligence that matters in Petaluma

Start with our commercial due diligence checklist, then add:

Confirm the parcel is inside city limits, not in the county’s Dairy Belt or West Petaluma plan areas.
Identify the exact zone and MU1 subzone, and whether a PUD or PCD overrides it.
Run the FAR math: 0.8 in C1, 1.2 in C2, 2.5 in mixed use, 1.5 or 3.0 in BP, 0.6 in I.
For any fueling station, read Section 22.035 before writing an offer.
Check FEMA and city floodway mapping along the river.
Add the city’s $2.00 per $1,000 to closing costs, with no assumed-loan credit.

Questions people ask

Does Petaluma have its own transfer tax?

Yes. The County Recorder lists Petaluma at $2.00 per $1,000, added to the county’s $0.55 per $500 and calculated without deducting assumed loans.

Can I build housing on a Petaluma commercial lot?

In the MU1 and MU2 zones, yes, up to 30 units per acre within a 2.5 FAR. In C1 and C2, check the use table and state housing laws with Planning.

What is the densest commercial zoning in Petaluma?

The mixed-use zones and BP. MU1 and MU2 allow a 2.5 FAR, and BP reaches 3.0 when all required parking is structured.

Can a new gas station open in Petaluma?

Section 22.035, added by the March 2021 ordinance, governs fueling stations as nonconforming uses. Confirm directly with Planning before assuming any new or expanded station is allowed.

Is all Petaluma industrial land the same?

No. The I zone allows 0.6 FAR for manufacturing and distribution, while BP mixes office, R&D and light industrial at higher intensity.

Who handles a parcel just outside Petaluma?

Permit Sonoma and the county code, often with a county area plan such as Petaluma Dairy Belt or West Petaluma.

Does Diamond handle commercial property in Petaluma?

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

Sources & notes

Note: We could not open the text of Section 22.035 itself, so its exact limits on fueling stations are not stated here. We did not review the full use tables, Chapter 6 floodway rules, historic district rules, the Central Petaluma or station area plans, short-term rental rules or business license tax rates. Corridor and district locations are general descriptions.

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

Inquire about a listing or to schedule a meeting

Matthew Martinez

Your inquiry is processed through our iHomefinder service. Review the form’s contact choices before submitting. Privacy Policy · Terms of Use.