By Ben Crosby, ALC, CCIM
Murray Wise and I have been marketing land together for 23 years, and if there’s anything we’ve learned in all that time, it is that demand for land can be affected by numerous factors that may not always be obvious. And right now, the Florida land market is benefiting from a powerful combination of factors. Let’s take a look at some of them.
Land-Use Transitions. In Florida, several demographic, economic and cyclic factors are coming into play. Owners of citrus groves face the age old problem of what to do about trees that are currently in decline. This is being accelerated by citrus greening, which is further shortening the useful life of many groves. Some are choosing to convert groves to row crops or pasture. Meanwhile, a strengthening economy is resulting in more residential and commercial development. The citrus greening challenges have fueled efforts to experiment with alternate crops. Timberland and groves are in some cases being cleared for use with row crops. And of course, the strengthening economy has brought more interest in developing agricultural land. All of these factors translate into increased demand for all types of land.
Regional shifts. Times have been rough for farmers and ranchers in many parts of the country. The drought in California is in the news almost every day. But other areas have their own troubles that have been in the works for several years. Ranchers and farmers alike in Texas and other states, for example, have had to cope with consecutive years of unfavorable weather, in addition to chronic water issues, and that’s changing their long-term prospects. As a result, many of them are looking to move their operations to Florida. That’s creating a new source of demand for pasture land and cropland. This is spilling over into the market for timber and recreational land, some of which is being converted to cropland and pasture. Meanwhile, falling commodity prices have caused farmland prices to stall in the Midwest, and that has investors turning their interest to Florida as well.
This all adds up to extraordinary demand for Florida land of all types. Right now, we see a Florida market in which there simply isn’t enough land for sale to meet the current level of demand. This puts current land owners in the catbird seat.
The long-term association of Crosby & Associates with Murray Wise Associates has enabled both companies to better serve buyers and sellers alike, and it puts us into an especially strong situation now. Here’s some advice I’m giving to land owners.
- Allow for rapidly changing conditions. Countless factors can disrupt current trends and upset the best laid plans. We’ve long seen what weather can do with droughts and ill-timed freezes. In addition, seemingly remote factors can come into play. China, which has cut back drastically on corn imports, could reverse course, resulting in higher corn prices and making land in the Midwest more attractive. Our economy remains fragile, and another recession could halt suburban growth in its tracks.
- Act on your own terms. Given the uncertainty of markets, it’s wise to control our own destiny whenever we can, and one way to do that is to sell when you wish to — not when you have to. Right now, demand is good. But it’s easy to see the supply of land increasing a great deal before too long, especially when you consider the number of farmers who are part of the baby boom generation. If you plan to sell any time in the next three, five or even eight years, it may be a good idea to go ahead and act now. Sure, prices and demand could go up. But waiting also entails a lot of risks. Health troubles, a bad crop year, international events and many other factors could force you into action at the worst possible time.
- Consider an auction to get fair market value. I handle a lot of private treaty transactions, so I understand the advantages of both. Accepting your neighbor’s offer for your farm may not get you the best price. An auction allows you to market your land to a wider market of prospective buyers, including local growers, developers and investors. It’s ideally suited for a fluid market like the current one.
If you believe you may be selling anytime in the near future, it wouldn’t hurt to give us a call at 863-293-5600 or call Murray Wise Associates at 217-398-6400. We’ll help you assess the market for your land and advise you on the best way to sell it.