Tag Archives: pennsylvania
US commercial real estate recovery lags behind residential, say agents
The US commercial real estate market still faces its share of challenges but property agents specialising in the sector are confident that marked improvement seen over the last year will continue. At a commercial economic issues and trends forum National Association of Realtors chief economist Lawrence Yun led a panel discussion about the forces shaping commercial real estate markets. The panellists agreed that the market has improved and expressed confidence that continued recovery in the economy will drive commercial real estate growth. ‘Commercial real estate usually recovers two years behind the economy. However, NAR members who practice commercial real estate are seeing a three to four year wait. It has been a long and slow recovery, but it is happening,’ said Yun. The forum heard that there are still headwinds facing the commercial sector. Subpar Gross Domestic Product growth, stagnating wage growth and low employment rates are all affecting demand for commercial properties. Yun explained that improving those underlying fundamentals is instrumental in maintaining a strong commercial market and another major hurdle facing the recovery is the lack of financing available for small investors. While large companies can access financing from Wall Street or international buyers, most financing for smaller investors still comes from regional or local banks and credit unions. Many of those small banks are hesitant or reluctant to give out commercial loans. ‘New financial regulations for all banks, big and small, are resulting in smaller banks bearing proportionally higher compliance costs. The little guys are taking the brunt of this. Maybe there should be waivers for smaller banks so they can give out the loans businesses need and help with community development,’ Yun added. According to Sam Chandan, founder and chief economist of Chandan Economics and associate faculty member at The Wharton School of the University of Pennsylvania, when it comes to multifamily homes Millennials love to rent. They prefer the flexibility and proximity to amenities that comes with renting rather than owning. However, that fails to take into account that while Millennials will always be Millennials, Millennials will not always be in their twenties. You could ask a 22 year old at any point in history if they want to own a house in the suburbs, move away from urban centres, or own a minivan and they will say no. But that answer has changed in the past and it will change again, and the multifamily sector needs to develop a narrative that takes that into account,’ he explained. The same problem is affecting other commercial markets, such as retail. Online commerce has changed the way commercial retail positions itself and attracts buyers. ‘While it’s true that you will never be able to get a haircut online, the same cannot be said for buying books or groceries. We cannot assume that because people always shopped at grocery stores that they will not learn and adopt another way,’ said Chandan. ‘The commercial market needs to develop a narrative that evaluates how… Continue reading
US home builders using new data analysis to decide where and what to build
A proliferation of data and new data analysis methods are changing the way builders in the United States buy, sell and develop vacant land, according to experts. Builders are cautiously optimistic that easier credit and more flexibility will help the new homes market rebound in 2015, according to experts at a building and building products symposium in New York. The state of the land market, a key factor in determining what kinds of housing gets built, where and at what price, was a common theme throughout the various discussions. ‘The real opportunity of land goes beyond the land itself. Builders are looking at land as much more than a piece of dirt now,’ said Steve Benson, chief executive officer of Phoenix based land banking and advisory firm Community Development Capital Group. Landowners and buyers alike are using multiple data sources to examine what is being built in other areas, which designs work best for certain parcels and which builders are best suited to maximize certain features of a given piece of land, Benson explained. Rather than building a certain set of homes on a given piece of land, developers today may be more apt to sell their land to a different type of developer rather than undergo a project themselves, or choose to build a different type of home than they normally would, based on data, he pointed out. ‘Real estate has always been about location, location, location. But with land especially, it’s future location, future location, future location. Today, data helps inform that equation for builders much more than in the past,’ he added. High land costs, and perhaps unrealistic value assessments by landowners, are a big reason why developers are having difficulty developing more entry level, lower cost communities and homes, according to Greg Vogel, chief executive officer of the Land Advisors Organization, an Arizona based land brokerage. Developable tracts of land appreciated very quickly in value during 2012 and 2013 in anticipation of a building boom in 2014 that largely has yet to materialise, he explained, adding that strong recent years have convinced today’s land owners that their land may be worth more than it is. As a result, builders are increasingly forced to put higher prices homes on developments they do control in order to recoup their higher land acquisition costs. This will create challenges for larger builders looking to cater to lower end and first time buyers, who are expected to enter the market in higher numbers in coming years. ‘Most observers agreed that it’s just a question of time until we see millennial demand pick up. If the entry level buyer does come back, I’m not sure there will be a lot of opportunities to develop those kinds of communities right away,’ Vogel said. Beyond the kinds of large, multi acre sites on the edge of cities and towns favoured by big, publicly traded home building companies, smaller lots located in downtowns and established communities also represent… Continue reading
Lucrative land: increased Demand For Farmland Drives Up Prices In Jefferson County
SUNDAY, SEPTEMBER 15, 2013 But as the price of commodity crops has climbed steeply, so has the demand for tillable farmland here. Land prices have doubled over the past five years as the area has evolved into a mecca for out-of-state farmers. Amish farmers have moved from Ohio and Pennsylvania to start farms here, while farmers from states across the Northeast and Midwest have scooped up the once inexpensive farmland to grow cash crops. Tillable farmland in the southern half of the county sold for $1,000 to $1,500 per acre five years ago, farmers say, but now goes for $2,000 to $3,000 per acre. In the county’s northern half, farmland that sold for less than $500 per acre is now priced at more than $1,000. Thanks to recent land purchases, the 950-cow dairy farm now owns about two-thirds of its 2,900 acres of tillable farmland; it leases the rest. About 1,600 acres of corn silage and 1,300 acres of hay will be harvested this fall. In February, Butterville Farms joined Robbins Family Grain, Sackets Harbor, and Hillcrest Farms, Ellisburg, to buy 2,600 acres of prime farmland in the towns of Watertown and Hounsfield for $4 million from a Connecticut landowner. In that deal, Butterville acquired 400 acres of tillable farmland off Route 3 in the town of Watertown. That price was considered expensive at the time, Mr. Barney said, but the land “has now at least doubled in value. We’d now get $4,000 per acre for that land.” “Here, everything we harvest goes through our cows,” he said. “As far as corn goes, it’s better that we harvest from our own land, because it’s now cheaper to grow than it is to buy. And if you wait to buy land, you can’t get any. We’d like prices to go back down to where they were, but I don’t think that’s going to happen.” Because of that trend, cash-crop farmers have purchased marginal farmland with heavier clay in the northern half of the county during the past five years for low prices, Mr. Hunter said. Soil on farms north of the Black River tends to drain water less efficiently, which results in lower harvest yields. While buying marginal farmland for cash crops is unusual, he said, farmers are raking in profits by doing so. As a result, Mr. Hunter said, farms that were leasing land at low prices have sometimes been bought out by cash-crop farmers who are willing to pay more. That is also a recent trend. OUT-OF-STATE TRANSPLANTS Despite climbing prices, tillable farmland here still is much less expensive than in other states, Sackets Harbor dairy farmer Ronald C. Robbins said. Ten years ago, he said, Jefferson County launched marketing initiatives to lure farmers from outside the region to take over farmland here. But those efforts have been scaled back, he said, because the influx of farmers from outside the region is competing with local dairy farms to buy land, driving up prices. He said cash-crop farmers have relocated operations to the north country from Kentucky, Nebraska, Iowa and Canada. Amish farmers have relocated here from Ohio and Pennsylvania. Tight competition for farmland has spurred large dairy farms such as Robbins Family Grain, which has 950 cows, to acquire farmland while they still can, Mr. Robbins said. After acquiring 950 acres of tillable farmland in the $4 million, three-partner sale in February, the farm plans to harvest 2,600 acres of corn for grain and silage, 2,200 acres of hay and 900 acres of soybeans this fall. A 280-stall dairy barn was built recently at the Sackets Harbor farm off County Road 145, which will enable it to expand its herd to more than 1,100 head of cattle over the next two years. Some small- to medium-size dairy farms, though, find it challenging to expand because of the farmland’s high prices, said Arthur F. Baderman, agricultural educator at Jefferson County’s extension office. “Some of these small farms don’t have anyone in the family to take over and are tired of milking cows,” he said. “They’re looking to either rent or sell land at high prices to larger farms so they can keep living in houses they’ve always lived in. They want to wipe the slate clean and have money for retirement.” Over that period, “there have been about six boom times where land values have increased at a rapid rate. But then we’ve hit times where land prices have gone from a positive to negative trend,” he said. “These cycles happen, and you can’t expect what’s going on in the last five years to be the trend in the next five, or further on out. Steep money and high commodity prices encourage people to buy land and expand, but that will change if we go back to low commodity prices in a year and interest rates go up.” “We were generally buying land here for 500 to 600 bucks a year ago, but now it’s over $1,000,” he said. “I think prices are going to go up 10 percent a year for a long time, because everybody is driving up the prices, and you have guys who are doing strictly crop farming.” Continue reading
