Commercial Real Estate in Novato: Downtown Grant Avenue, LIO Industrial Parks and Overlay Rules

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

Novato is Marin’s northernmost city and holds most of the county’s industrial and flex space. Commercial property centers on downtown Grant Avenue and Redwood Boulevard, shopping centers along Highway 101, light industrial and office parks such as the Novato Industrial Park, and the former Hamilton air base. Zoning comes from Chapter XIX of the Novato Municipal Code, with overlays that can change what a site may hold. Confirm the district and overlays for each parcel with Novato Community Development.

Who controls the parcel

Inside city limits, the City of Novato regulates land use under Chapter XIX. Unincorporated pockets nearby, such as parts of Black Point, Green Point and the Atherton Avenue corridor, fall under Marin County. Those are covered in our Marin County commercial guide. Under Section 19.16.020, an overlay shows up as a suffix on the zoning map. Development must meet both the base district and the overlay. Read both before writing an offer.

Novato zoning for commercial, industrial and mixed use

Division 19.12 sets seven districts. Standards come from Table 2-8, last amended by Ordinance 1705 in October 2023. Uses come from Table 2-7, last amended in March 2025.

District	Intended uses	Notes (FAR / height / coverage)
BPO Business and Professional Office	Offices, medical and office campuses, R&D	0.40 FAR, 35 ft, 40%. Restaurants by use permit. 10,000 sq ft minimum lot, 25 ft front yard
CN Neighborhood Commercial	Shopping and services for nearby residents	0.40, or 0.60 if the extra area is housing or senior care. Mixed-use multifamily by use permit
CG General Commercial	Community and regional retail and services	0.40, 35 ft. Auto sales, bars and theaters by use permit
CDR Downtown Core Retail	Pedestrian retail, entertainment and personal services, with housing above	1.2 FAR, or 2.0 with housing. 100% coverage. 35 ft, up to 45 ft in the Downtown overlay
CDB Downtown Core Business	Broad commercial, office and residential mix	Same standards as CDR. Banks and grocery permitted
CI Commercial/Industrial	Auto repair, construction trades, intensive commercial	1.0 FAR. Manufacturing and warehousing permitted. Major auto repair and contractor yards by use permit
LIO Light Industrial/Office	Light manufacturing, warehousing, offices, assembly	0.40 FAR, 60% coverage. Auto, RV and boat sales permitted

Where a commercial site borders single-family zoning, side yards of 6 to 10 feet and rear yards of 10 to 15 feet apply, depending on building height. Otherwise, most districts need no yards.

Downtown Grant Avenue and the industrial parks

Downtown. The Downtown Novato Specific Plan overlay (D) requires projects to follow the Specific Plan’s design guidelines and pedestrian sign rules. Where the plan and the zoning code conflict, the plan controls. In CDR and CDB, habitable floors may rise to 45 feet with design review. On Grant Avenue and Redwood Boulevard, the street-facing ground floor is reserved for retail, entertainment and personal services. Parking may not front either street. Ground-floor offices in the downtown business core need one space per 250 square feet. Multifamily housing is barred on First Street. Downtown parking minimums are lower than citywide, and shared parking and waivers are possible.

Industrial and flex space. CI is written to keep existing auto repair and building-trade businesses in place. LIO covers warehousing, manufacturing and offices with limited nuisance. Table 2-8 sets LIO at 0.40 FAR but carries a footnote for the Novato Industrial Park and the Hamilton Hangar area. The text we read was garbled there, so ask planning staff which FAR applies to a given parcel. Scrap yards and adult businesses need a use permit in LIO.

Overlays, cannabis and lodging

Baylands and flood overlays. Much of eastern Novato sits on former tidal marsh. In the Baylands (B) overlay, a use permit is required for most development. Projects also need a constraints analysis, a 100-foot buffer from tidal areas and 2:1 wetland replacement, and density counts only land above mean high tide. The Flood Hazard (F) overlay limits the F1 primary floodway to boat docks and requires hydraulic studies in the F3 100-year floodplain.

Historic (H) overlay. Alterations, new uses and demolition need design review. Demolition also needs a professional evaluation of the building’s significance and one of five required findings.

Housing on commercial sites. The Affordable Housing Opportunity (AHO) overlay covers Housing Element sites. It allows 20 to 23 units per acre only if 20% of the units are affordable for 55 years, and existing commercial uses may continue until the site is redeveloped.

Cannabis. Under Table 2-7, indoor cultivation, manufacturing and distribution are permitted in CI and LIO. Non-storefront retail is permitted in BPO, CI and LIO. Every operator also needs a city Commercial Cannabis Business Permit in addition to zoning clearance.

Lodging. Chapter XVI, Section 16-2 sets a 12% hotel room tax on rent, paid by the guest to the operator.

Transfer tax, business tax and property tax

Novato has no city transfer tax. Chapter XVI lists the hotel tax, sales taxes and a residential development tax, but no real property transfer tax. The County Recorder’s sheet names only San Rafael with an added tax, so a Novato sale pays the county’s $0.55 per $500, figured without assumed liens. Retail tenants should know the city has added two transactions and use taxes on top of the base sales tax: 0.25% from 2015 (Ordinance 1601) and 0.75% from 2024 (Ordinance 1717). Business licensing falls under Chapter VIII. A sale generally triggers Proposition 13 reassessment.

Due diligence that matters in Novato

Start with our commercial due diligence checklist, then add:

Read the zoning map suffix for B, D, F, H or AHO overlays.
East of Highway 101, check Baylands buffers and flood zone status, and order a hydraulic study if fill or expansion is planned.
On Grant Avenue or Redwood Boulevard, confirm the ground-floor frontage rule before leasing to an office tenant.
For LIO buildings, confirm the applicable FAR with planning, especially in the Novato Industrial Park or near Hamilton.
For cannabis tenants, check both the zoning table and city business permit availability.
For historic buildings, plan for design review before any exterior change.

Questions people ask

Does Novato have a city transfer tax?

No. Its taxation chapter has none, and the Recorder lists only San Rafael. The county’s $0.55 per $500 applies.

Can I put an office on the ground floor on Grant Avenue?

Generally not on the street frontage. Ground floors on Grant Avenue and Redwood Boulevard are reserved for retail, entertainment and personal services, and offices go upstairs or in back.

How tall can a downtown building be?

35 feet, with habitable floors up to 45 feet in the downtown core districts with design review.

Where is warehousing allowed?

By right in CI and LIO. Those districts also allow light manufacturing, and LIO allows vehicle, RV and boat sales.

Are cannabis businesses allowed in Novato?

Indoor cultivation, manufacturing and distribution are permitted in CI and LIO. Non-storefront retail is permitted in BPO, CI and LIO, and every operator needs a city permit.

What is the hotel tax?

12% of room rent under Section 16-2.3.

What does the Baylands overlay mean for a buyer?

A use permit for most work, a 100-foot tidal buffer, wetland replacement, and density counted only on land above mean high tide.

Does Diamond handle commercial property in Novato?

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

Sources & notes

Novato Municipal Code Division 19.12, Commercial/Industrial Districts (GoCodebook, October 2026)
NMC Division 19.16, Overlay Zoning Districts
NMC Chapter XVI, Taxation
NMC Chapter VIII, Licensing in General (chapter title only reviewed)
Marin County Recorder, transfer tax

Note: We did not read the Downtown Novato Specific Plan, the Hamilton planning documents, the zoning map or business license rates. The LIO FAR footnote was unclear in the copy we used.

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

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