Land Sales

Not too long ago, you could make a decent living specializing in land sales.   That changed about 3 years ago with the beginning of our current recession.    At that time, I had one tract under contract with a well known home supply retailer and several other properties next to a quarry under contract with a large industrial company.    All were supposed to close within a month and then suddenly they were all wiped out in just a few weeks time.   

The residential real estate bust, the financial market meltdown and the shock waves that followed effectively ended development.    Now three years later, many of the developers went belly up and most of the financing available for new projects dried up.   The obvious result is that the demand for land has declined tremendously.    Accordingly, prices for land are roughly 40% less than they were 3 years ago.  

Presently on KCREA, there are approximately 600 listings for land.   As of last Friday, (March 25) KCREA only reported 3 parcels of land having sold in the first 3 months of 2011.     At that rate, it would take 50 years for all of these parcels to sell.  

When development was rampant, many developers were willing to buy land that needed rezoning, or needed to wait on sewers or other infrastructure.   That is no longer the case.    If a developer is lucky enough to have a project in the works, they want land that they can use immediately not something that would be available in a year or so.  With that in mind, at least for now, I am not taking new land listing on properties that would need rezoning or that do not already have basic infrastructure in place.

Recently, I called on several companies I have dealt with and asked about their development plans for 2011.   Almost all of them told me that they were still waiting to see if the economy would improve more before commiting to new projects.     Still, I cant help but feel that this is about to turn around.   Many companies have been sitting on the sidelines for 3 years now.   At some point, they need to either begin development again or consider shutting down.  

The thing to take away here is that if you have commercial land you would like to sell, you need to talk to someone who understands the market to be successful.   The commercial land market is a very difficult market still and unless you have 50 years to wait to sell your property, you need to do everything possible to make that property stand out in the top 1% of all the land available for sale.

Have a great day all.  

David

David W. McCoy
Associate Broker
Commonwealth Commercial Real Estate
10444 Bluegrass Pkwy
Louisville, KY  40299