We've all heard horror stories of naive investors being suckered into buying unbuildable lots somewhere out in the boondocks. Some land just isn't suitable for residential development, but that doesn't mean it's unsuitable for any economic use. I can think of a few economically productive uses for unbuildable land, especially in developed areas with code restrictions.
Rights of way. That parcel you think is worthless at first glance may be valuable because it's on the way to something valuable somewhere else. I'd be very interested to see where the California high-speed rail project plans to locate its lines. The tracks will likely be laid parallel to existing transit lines to minimize disruption to the dense urbanization of the Golden State. Any deviation from those lines means some property owner is going to get lucky (or unlucky, if forced to sell due to eminent domain).
Tower sites. Wind turbines, wi-fi towers, and billboards are perfect for vacant land. Restrictions apply. Urban wind turbines are subject to height and noise rules, and of course they have to be located along a viable wind stream. Wi-fi is the hot new infrastructure thing for some cities. Billboards strike me as an all-purpose winner in either urban or rural (along highways) locations.
Natural resources. Here's where things get interesting. Drilling for oil or minerals in an urban area is probably a non-starter in most places, although it's been done in California. I'll never forget my drives through Paso Robles and Kern County where oilfields co-exist with ranches and farms. Bakersfield is a classic, where oil derricks are intermingled with development.
Location is everything in real estate, even with sites unsuited for habitation. Unbuildable land can still be subject to zoning and environmental restrictions. Title search and visual inspection are always absolutely necessary parts of due diligence. One advantage to finding a productive use for unbuildable land is that it avoids the many liabilities facing landlords of inhabited property.
