Where are the good deals now? Vacant Land gets a second look.
It was just a few years ago when the banks were selling REO property and investors were snapping up bargains at low prices per square foot. Here we are in 2016 and those deals seem long behind us. I've sold a few properties at relatively inexpensive prices in the past year, but overall sellers are holding closer to their asking prices and investors need to pay up, in order to buy property this year.
So what are investors looking at now that building prices are increasing? Land. That's right, vacant land has made a comeback! Whether it's a large development tract that could be a subdivision or commercial development or just a single-family home site, investors are buying land with the intentions of building new developments. There are a lot of new buildings currently planned for construction in the area. Not all of these may end up being built, but developers are surging ahead with confidence.
Some owners of vacant land have been holding onto their properties for over a decade waiting to sell and they are now able to. Prices have not risen nearly as fast on vacant sites as they have on properties with buildings on them. This has created an opportunity for investors to buy vacant parcels that can be developed or divided and will offer the investor a better return than leased investment properties are currently offering.
While I still have seen some good buildings for sale, I have seen some great development parcels for sale. These range from 1-acre commercial development sites that could be a 5,000 SF office, retail or multifamily home to a 40 acre sites ripe for mixed-use retail, industrial and residential development. In a market where we've got almost no industrial space available, it won't be long before developers start putting up industrial buildings to fill the demand that is not currently being met.
Just like properties with buildings on them, the highest demand for vacant sites is in the central business district. We've got more pending developments for high-end condos downtown than we've had in the 25 years that I've lived here. That said, some of the best values are just a couple miles from downtown where someone can build homes, retail, office or warehouses and offer amenities that can't be had in land constrained downtown setting, such as easy access and plenty of parking.
Developments can take many years to plan and build. The process of getting a project approved and built and the effort and expense involved is not for everybody. However, developers get an incredible sense of accomplishment and pride when a good project finally comes together. I believe it may be even more satisfying than the pride of renovating or leasing an existing building. Developing vacant land spurs the imagination and can certainly be a fun and exciting business to be involved in.
Dan Stiebel, CCIM