Odds of a recession, alternative crops for Florida farmers and the governor’s environmental agenda were among topics that experts discussed at the recent Lay of the Land Conference.
(PRUnderground) April 5th, 2019
ABOUT THAT RECESSION
You can stop worrying about a recession anytime soon … maybe. Kiernan Conway, chief economist for CCIM Institute, and Jerry Parrish, chief economist for Florida Chamber Foundation, both said they think a recession is unlikely in 2019. Conway said he does worry about one in 2020.
Other key messages from Conway were that the interest on the federal debt is “unsustainable,” and that Florida’s average cropland value ($6,800 per acre) exceeds that of the United States ($4,100). He said only a few other states surpass Florida in average cropland value, based on USDA data.
Parrish gave Florida another gold star for exceeding the national job growth rate since 2012, except for a brief period when Hurricane Irma hit the Sunshine State in 2017. Florida’s job growth rate is now 2.4 percent, versus 1.7 percent for the United States. Parrish added that Florida has been the top state for job growth for the past year.
Industrial hemp, which has been legalized for commercial planting by the federal government but not yet by Florida, created the most buzz in the alternative crops discussion. At least it had the most people talking about it. Holly Bell, the Florida Department of Agriculture and Consumer Services’ director of cannabis, said, “I think hemp can be an amazing opportunity in Florida.” Among other things, Bell said, industrial hemp might replace much of the North Florida timberland devastated by Hurricane Michael in 2018.
Zachary Brym, program coordinator for the University of Florida Institute of Food and Agricultural Sciences’ Industrial Hemp Pilot Project, discussed the project’s efforts. The project, which is the only current legal use of hemp in Florida, will assess plant varieties, cropping systems, invasion risk, processing and commercialization. Hemp has many potential uses, including as fiber, food, feed, building materials and bioplastics.
Hops, a primary ingredient in beer, was addressed by Simon Bollin, agribusiness development manager for the Hillsborough County Economic Development agency. He said hops production in Florida is being researched at the Gulf Coast Research and Education Center in Balm. He noted that hops, now grown mostly in colder climates including some northwestern states, could be a challenge in Florida because of high temperatures and high humidity.
Bamboo was touted as an alternative crop by Diego Cespedes, vice president of sales for bamboo producer OnlyMoso USA. He said bamboo’s uses include food, windbreaks, flooring, textiles and paper. He showed a TV news segment about 35 acres of bamboo that a citrus grower has planted in Frostproof.
Naveen Sikka, founder and CEO of TerViva, discussed pongamia, a tree crop that produces plant protein for animal feed and oil. He said pongamia has many of the same uses as soybeans, which are grown on 100 million acres in the United States. Sikka said pongamia can easily be grown on former citrus land, and that a million acres could be planted in Florida without economically impacting markets.
POLITICS AND THE ENVIRONMENT
Deputy Commissioner of Agriculture Deborah Tannenbaum focused on new Florida Agriculture Commissioner Nikki Fried’s efforts on behalf of agriculturists. She said Fried will form an Agriculture Innovation Committee to ensure agriculture has access to the technology it will need for the future. She added that Fried is focused on helping Panhandle farmers who suffered heavy losses in 2018’s Hurricane Michael. Tannenbaum said water, climate change, land conservation and alternative crops are also major concerns for Fried.
Florida Department of Environmental Protection Secretary Noah Valenstein discussed new Gov. Ron DeSantis’ environmental agenda and answered numerous environment-related questions from the audience. He noted that within days of taking office in January, DeSantis signed an executive order calling for $2.5 billion over the next four years for Everglades restoration and water protection. The order will also establish a Blue-Algae Task Force focusing on reducing impacts of blue-green algae blooms. “Water quality is the focus of the state,” Valenstein said. He said DeSantis wants to ensure that all environmental actions taken by the state are based on science.
MARKET REPORT: ALL FLORIDA LAND SECTORS DOING WELL
“All sectors of the Florida land market are doing well,” SRE founder Dean Saunders states in the introduction to the Lay of the Land 2018 Market Report. The report was issued at the Land Conference.
Saunders reports that the 2018 land market was strong “as our state continued to grow by 1,000 people per day and the unemployment rate was below 4 percent. People want jobs, water and sunshine and the rising tide of our growing population floats all boats.”
“The Lay of the Land Market Report continues to be the single source of verified Florida land sales information,” Saunders continues. He notes that SRE works hard to capture all Florida land sales for the numerous categories covered. “We partner with a network of appraisers and land professionals to vet the data and bring you accurate information,” he writes. “The result is the most comprehensive view of Florida land values in the industry today.”
A brief summary of 2018 sales and trends by land category follows.
Ranch and recreational land
Demand for smaller ranch and hunting tracts is very high. As a result, the price for ranch and recreation tracts between 100 and 500 acres has increased. “We see prices between $4,000 and $6,500 per acre depending on the exact size and the number of amenities and improvements to the property,” the report states.
Sixteen unencumbered ranch and recreational land sales over 500 acres were reported. Sales totaled 53,232 acres. Most of that, 39,000 acres, came from the sale of the El Maximo Ranch in Osceola County. The average per-acre sales price was $3,466.
“There is strong international demand for ranches, and we have closed some transactions this year from foreign buyers,” the report continues. “The demand for housing is strong, and developers and homebuilders are buying more land, including ranches, to ensure their lot inventory.”
Residential lots and land
(Central Florida: Brevard, Hernando, Hillsborough, Indian River, Lake, Manatee, Marion, Martin, Orange, Osceola, Pasco, Polk, Sarasota, Seminole, St. Lucie, Sumter and Volusia counties)
“Builder confidence in single-family homes is up, and that means good things for landowners, developers, home buyers and everyone else in the residential development process,” the report states.
The residential report primarily covers land approved for single-family development, with some multi-family sales reflected. The per-acre price refers to upland acres.
The market for undeveloped residential land contiguous to or in the path of growth is very strong. The average price per-acre was $49,949. This average price is $6,010 above the average four years ago, a 13.7 percent increase over that time.
By county, the most activity (acres purchased) in descending order occurred in Lake, Osceola, Pasco, Hillsborough, Polk, Sarasota and Orange counties. Seminole didn’t have a high number of acres sold but did have the highest average price at $105,507 per acre, followed by Orange County at $92,289 per acre.
Similar to undeveloped land, the market for finished lots is strong. This category refers to lots for single-family homes that are ready to build on or have minor tasks remaining. The average price of a developed lot was $51,790. That is $8,864 more than four years ago, a 20.6 percent increase. The counties with the most lots sold in descending order are Hillsborough, Polk, Lake, Orange, Indian River, Manatee and Osceola. Sarasota County had the highest average price at $93,813 per lot; Orange County was second-highest at $85,933 per lot.
Hurricane Michael devastated timber in Florida’s Panhandle in October 2018. More than 2.8 million acres of Florida timberland were believed to be damaged, with the timber value damage estimated at $1.3 billion.
The report states that it is logical to assume the storm damage will cause timberland investors to reevaluate how they account for hurricane risks before investing anywhere in Florida. Interest in Florida timberland is not expected to be impacted in the long term, and timberland values should remain relatively strong.
Four timberland sales of more than 1,000 acres were verified in 2018. The sales ranged in size from 1,045 acres to 13,220 acres. Gross sales prices ranged from $1,000 to $2,259 per acre, with an average sales price of $1,673 per acre. That is significantly higher than the 2017 average of $1,298 per acre.
“We do not believe this is indicative of a jump in timberland prices year over year,” the report states. “Rather it is believed to be more reflective of the limited number of sales from which to draw data. Overall, we believe Florida timberland prices to have been relatively stable through 2018.”
A real estate investment trust was the buyer of the two largest timberland tracts sold in 2018. Those sales were of 13,220 acres in Flagler and St. Johns counties and 6,680 acres in Columbia County.
“At the smaller end of the timberland size spectrum (500 to 1,000 acres), we have observed increased interest from buyers with more of a recreational interest in properties,” the report states.
Treasure Coast citrus and ranchettes
(Indian River district: Indian River, St. Lucie, Brevard, Martin and Okeechobee counties)
There were a limited number of transactions for citrus groves, former groves or farmlands. Solar fields, pongamia for bio-fuels, Chinese vegetables, tropical fruits, water farming and hydroponic farming have all sprung up where citrus used to thrive. Power companies have continued buying land for solar production, typically in 300- to 500-acre plots and ideally near a suitable power grid.
“We continue to see some former groves converting to conservation lands with Wetlands Reserve Program (WRP) easements, providing an exit strategy at attractive prices,” the report states.
It is rare in this area to see former citrus grove lands for replanting sell for more than $5,000 per acre. These properties typically sell in the high $3,000 to low $4,000 per-acre range. However, some citrus groves sold for $13,000 to $16,000 per acre.
Ranchette developments in well-located areas continue to do well, breaking larger parcels into smaller 5- and 10-acre home sites. Those lots are normally selling in the $25,000 to $30,000 per-acre range. In Indian River County, 5-acre ranchettes are selling for $20,000 to $30,000 per acre with slightly lower prices in less desirable areas.
In St. Lucie County, 5-acre lots in desirable areas are typically selling in the $18,000 to $26,000 per-acre range Prices are the strongest in Martin County with sales mostly in the $30,000 to $40,000 per-acre range for Palm City home sites in the 5-acre range; sales in more rural areas are substantially lower at around $18,000 to $20,000 per-acre.
Central Florida farmland/cropland
(Southwest and Central Florida: Row crops in Hillsborough, Manatee, Polk, Hardee, DeSoto, Charlotte, Highlands, Okeechobee, Lee, Hendry and Collier counties)
Cropland sales for vegetables increased over 2017 due to the large institutional purchase of farmland in Hendry and Collier counties. The largest purchase was in Collier and was 5,630 gross acres consisting of 3,612 upland farmable acres.
Quality, irrigated farmland values have increased in the interior of Central Florida and in the Southwest regions, while South Hillsborough County has remained steady in comparison to 2017 sales.
Hardee County farmland prices for small farms of 39 acres each commanded an average of $8,342 per upland acre.
In the Southwest, larger acreage farm prices ranged from $6,226 to $7,833 per farmable upland acre without packing facilities.
Due to its proximity to coastal urban areas, South Hillsborough County continues to command the highest sales prices recorded at $14,715 and $24,324 per farmable upland acre. Few sales were recorded for strawberry farms; the three small-acreage farms that were sold continued to hold steady in the $24,000 to $28,000 range.
Citrus: Central Ridge, South Central and Southwest
(Polk, DeSoto, Hardee, Hillsborough, Okeechobee, Manatee, Highlands, Lake, Collier and Hendry counties)
Citrus groves continue to make up a significant portion of agricultural real estate sales. Grove sale sizes in the region ranged from 7 to 880 net-tree acres. The average size of grove sales was 65 net-tree acres. Sales totaled approximately 6,022 gross acres and 5,230 net tree acres.
The 80 citrus land sales exceeded $41 million. Sales prices ranged from $1,945 per gross acre to $15,764 per gross acre. The net-tree citrus acres sold from $2,056 per acre to $23,191 per acre. The average for all sales was $6,854 per gross acre and $7,892 per net-tree acre.
The price per net-tree acre was approximately 5.8 percent higher than in 2017, and the gross acre price was approximately 9.2 percent higher than in 2017.
Seven sales of citrus groves for alternate uses such as residential/commercial development totaled just over $1.9 million. Those sales were of 164 gross acres averaging $11,956 per gross acre, with 126 net-tree acres averaging $15,579 per acre.
“Citrus groves with ample production are profitable,” the report states. “Citrus greening disease continues to reduce production and debilitate trees statewide.”
Everglades Agricultural Area (EAA) in South Florida
There were only four notable transactions. Three sales were within Palm Beach County, with the fourth in southern Martin County. U.S. Sugar made three of the purchases for continued sugarcane production. The acreages sold ranged from 116 to 2,579. Per-acre sale prices ranged from $10,231 to $15,517.
The report also notes several small sales to sod farming operations near Belle Glade, Pahokee and Canal Point. The prices were more than $20,000 per acre.
Several large- and medium-sized land deals occurred. They included lands in agricultural use with more than 40 acres. Sales of farmland and tropical fruit groves ranged from $38,000 to more than $80,000 per acre. The prices are up from previous years.
In partnership with the USDA’s Natural Resources Conservation Service, Miami-Dade County purchased conservation easements/development rights on several agricultural tracts with prices around $17,500 per acre.
The general trend in the Homestead region’s agricultural industry has been a decrease in cropland and groves, with an increase in nurseries and greenhouses. The robust residential real estate market of South Florida has buoyed the nurseries and greenhouses.
A remainder rights sale is the sale of land encumbered with a conservation easement. Nine remainder rights sales were determined to reflect market transactions. Five were between $1,055 and $2,022 per acre. The two smallest transactions were 102 acres and 77 acres and sold for $5,800 per acre and $3,900 per acre, respectively.
Various government agencies purchased 27 conservation easements totaling 26,833 acres for $60.5 million. The USDA’s Natural Resources Conservation Service led the way with 16 easements, mostly Wetland Reserve Easement, followed by Florida Department of Agriculture and Consumer Services with seven Rural and Family Lands Protection Program easements.
Demand for conservation easements is very high, but adequate government funding remains an issue.
About the Lay of the Land Conference
The Lay of the Land Conference is an annual gathering of landowners, policymakers, investors and other industry affiliates who want the most accurate, current data about the Florida land market. Guest speakers share economic, market, sales and regulatory expertise. To learn more, visit layofthelandconference.com.
About Saunders Real Estate
About Saunders Real Estate
Saunders Real Estate is regarded as an authority on all types of Florida land and conservation easements, transacting over $2.4 billion in sales since 1996. Offering land, forestry, and conservation easement real estate services through Saunders Real Estate and the Saunders Real Estate Forestry Group, the Saunders team of land professionals offers advisory and transactional services through their home office in Lakeland, FL, the North Florida office in High Springs, FL, and the South Georgia office in Thomasville, GA. We provide services to land and commercial clients through both SRE and our commercial real estate brokerage, Saunders Ralston Dantzler Realty.
Original Press Release.