Report: Land Values in Florida Rock Solid
In March, Coldwell Banker Commercial Saunders Real Estate hosted its annual Lay of the Land Conference in Orlando. Each year during the conference, Dean Saunders, founder of the Lakeland-based company, releases his “Lay of the Land Report,” which provides property values based upon verified sales for the previous year. Florida’s land market values remained strong in 2018, bolstered by the nearly 1,000 people moving into the state daily and an unemployment rate below 4%.
He noted the strong economy and no state income tax is a big draw.
People want jobs, water, and sunshine. “The rising tide of our growing population floats all boats,” Saunders said. “All sectors [of property value] are doing pretty well.”
The overall average of property value (including housing) increased by 6.3% in 2018 over the previous year. Last year, there were 11,534,652 parcels of land in Florida. Saunders noted that number would grow as parcels get subdivided and the property, as a whole, is roughly valued at more than $3 trillion.
Saunders’ presentation, and those from other economists speaking at the conference, indicated an expectation that 2019 would mark another positive year for growth and land values holding steady –– increasing in some locations and segments.
Ranch and Recreational Land
In 2018, there were 16 verified sales of ranch and recreational land of 500 acres or more. Prices for the land ranged between $4,000 and $6,500 per acre depending on size, number of amenities, and improvements to the property. The average per-acre sales price was $3,466, which is about 5% lower than in 2017. The 16 sales totaled 53,232 acres, with a large portion coming from the sale of the El Maximo Ranch in Osceola County, which totaled 39,000 acres.
Saunders noted demand remains strong from foreign buyers. The demand for housing also is driving some developers and home builders to buy more ranch land to ensure lot inventory.
Citrus groves continue to make up a significant portion of agricultural real estate sales. Prices range widely based how good the land is and grove productivity. There were 80 grove land transactions in 2018. Industry consolidation continues with smaller growers getting out, which makes up a good portion of the sales activity.
“Most of the sales ranged in the $6,000 to $9,000 per-acre range for groves,” Saunders noted. “There were a few in the $14,000 per-acre range, but these were really high-quality groves with good production.”
The value of the grove land was 5.8% higher per net-tree acre in 2018 and 9.2% higher per gross acre when compared to 2017. The volume of sales acreage was down by 45% in 2018 versus the previous year.
Saunders said to expect continued demand for higher quality groves and more marginal groves being purchased for alternative crops or for real estate development.
There were a limited number of citrus groves and other farmland transactions on the Treasure Coast in 2018. But land uses continue to evolve. Solar fields, pongamia, ethnic vegetables, tropical fruits, water storage, and hydroponic farming all have developed on old citrus grove land in recent years.
High citrus fruit prices have encouraged some larger, more aggressive growers to replant and expand acreage, but it is a challenging area of the state. Strong fruit contracts, tax incentives, and assistance for tree planting create a favorable environment, but one that comes with risks in the era of HLB.
Residential development continues at a rapid clip, with ranchette sites (5 acres to 10 acres) selling anywhere from $20,000 to $50,000 per acre.
Southwest and Central Florida
Cropland sales for vegetables increased in 2018 due to the large institutional purchases of farmland in Hendry and Collier counties. Across the region, agricultural land values fall in the $6,000 to $8,000 per-acre range. Due to its proximity to a coastal urban area, south Hillsborough County is commanding the highest sales prices recorded at $14,715 and $24,324 per farmable upland acre.
Institutional investment funds will continue to seek out farm operations and land for their portfolios. Growers cashing out their farmland and entering into a leaseback arrangement is a continuing trend in the region.
In 2018, land sales of farmland and tropical fruit groves occurred in the $38,000 to more than $80,000 per-acre range. This illustrates continued strong demand for productive land in the area. Proximity to urban development also is influencing higher prices.
To preserve the agricultural nature of the Homestead area, Miami-Dade County, along with USDA’s Natural Resource Conservation Service, has been purchasing conservation easements and development rights on some farmland.
A drive of any distance in Florida illustrates that commercial and residential building is booming across much of the state. Builder confidence is up for single-family homes fueled by low mortgage rates and an excellent job market.
“We are looking at pricing for [land for residential development] in that 17-county area [evaluated in the report] average about $50,000 per acre,” Saunders noted. “That is up by about $6,000, or 14%, from four years ago. There is more demand out there than supply, but there is a lot of supply in the pipeline working through the entitlement process. That will be expressed in higher values for lots and houses.”