On Tuesday, I updated you on the 3Q11 performance of Bakersfield’s Industrial Building Market.
Today, a look at the 3Q11 Industrial Land Market.
First, a distinction between “Finished Lots” and “Raw Land.” A Finished Lot is land that has been parcelized into ready-to-build-on lots, with streets, curbs, gutters, and sometimes sidewalks in place, and with utility stubs to the parcel line. Utility stubs mean stubs for the wet utilities (water, sewer), natural gas, and conduit for the dry utilities (electric, telephone). These dry conduits are not filled with live wires until plans for a building are approved. Why? Because the actual load needed is not known until application for service has been made and approved. Raw Land is land absent all fully-built streets, curbs, gutters, sidewalks, and utility stubs, but it is zoned for industrial.
The Statistics
Finished Lots. Here’s the report on Finished Lots that sold in 3Q11 as compared with the same periods of the previous two years:
| |
3Q09 |
|
3Q10 |
|
3Q11 |
| Total Acres Sold |
10.7 ac |
|
212.8 ac |
|
16.5 ac |
| Number of Sales |
6 |
|
10 |
|
5 |
| Average Lot Size |
1.8 ac |
|
21.3 ac |
|
3.29 ac |
| Average Price per SF |
$5.60 / sf |
|
$1.48/ sf |
|
$3.29/ sf |
What the heck happened in 3Q10?! Well, that was the quarter that 145 acres of finished lots in North Meadows Business Park (Hwy 65 at Imperial Street) sold in bulk to Roll Int’l from the bank who foreclosed on the construction loan that built the park. Remove this sale, and the average price becomes $2.40/sf…about where we were in 2004, just prior to the last boom period. Now, pricing is up to an average of $3.29/sf, a nice 37% increase.
Raw Land. Here’s the report on Raw Industrial-Zoned Land that has sold in 3Q11 as compared to the same periods of the previous two years:
| |
3Q09 |
|
3Q10 |
|
3Q11 |
| Total Acres Sold |
0 ac |
|
66.7 ac |
|
70.3 ac |
| Number of Sales |
0 |
|
2 |
|
1 |
| Average Size |
- |
|
33.4 ac |
|
70.3 ac |
| Average Price per SF |
- |
|
$0.82/ sf |
|
$0.57/ sf |
With just one sale, it is difficult to draw conclusions.
Supply v. Demand
Knowing the supply is but half the effort, and supply is pretty easy to track. All that must be done, after all, is to simply count up all the available parcels of land. We do so across 9 size categories. Demand is more difficult to calculate, but we have developed a proprietary means of doing so. Our “Supply v. Demand” Charts compare Supply against Demand in each size category. Supply exceeds Demand? Buyer’s market. Supply less than Demand? Seller’s market. We know the state of this dynamic in each category, and we calculate it every week. For the last three years, a Buyer’s Market existed in every category. So it is significant that we’ve now moved into a Seller’s Market in one of the nine, and we’re at equilibrium in one other. Not much, but improvement nonetheless.
Careful!
These tables tell the fundamental story, as what I show here are the total numbers from the 9 land size categories we track. It would be a mistake to apply the average pricing from these tables to any one deal. Our “Broker’s Opinion of Value” (see our “Offers of Help” on the Home page) is our tailored estimation of current market value of any specific property. This helps us, for instance, in designing a marketing campaign for any property. We also consult our Supply v. Demand charts for the purpose of gaining a sensitivity to the degree of the leaning of our specified category toward the seller or the buyer. And then we weave throughout all of this the fact that every property owner is unique, possessing his/her own motivations. Our job as broker is to know about these motivations.
We Offer Help
With all of this, we are a gateway to finding value. Call us to discuss your unique situation; let us demonstrate our value to you!
Author: Wayne Kress
