Browse Category: Land

USDA Land Values – A Comprehensive Report

The role that agriculture plays in the US economy is enormous, owing in part to the fact that the US is by far the largest exporter of ag products.  As a critical sector in commercial real estate, agriculture receives a great deal of attention from federal government econometric researchers, which gives ag land investors and market watchers a wide range of data to use.  But what are the leading indicators (predictive of future price moves) and what are the trailing indicators (numbers that follow motion in other numbers)?  What’s cause and what’s effect in this marketplace?

As if to answer the question by trying to answer *any and all* questions under the topic’s umbrella, the US Department of Agriculture (USDA) publishes a mountain of data concerning the agricultural land market, and it’s available for free.

Beginning with the National Agricultural Statistics Service’s publication, Land Values 2015 Summary , investors can learn recent histories in farm land value by state, broken down by irrigaged and non-irrigated land as well as by a host of other types.

It’s a great starting point to explore the relationships between land prices and the prices of agricultural products, as well as the phenomena of inflation, agricultural land speculation and interest rate policy as they apply to this giant sector of the national commercial land market.

RLI Educational Tracks Are Available

The REALTORS Land Institute (RLI) is ready to help professionals navigate the ins and outs of the agricultural land marketplace with continuing education and conferences focusing on this sector, including the upcoming National Land Conference in Dallas, March 11. Learn more at

LANDU Education Week



Are you working toward the prestigious Accredited Land Consultant (ALC) designation? There’s no better time than this month to come to Chicago to pick up all three required courses and all three electives.   Additionally, three courses on the track for ALCE Advanced designation are on offer.

The dates are set for June 22-30. Check out an ALC information page on ALC Education Week here.

Register here. 


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REALTORS® Land Institute Honors 2013 Award Winners


farm land


Accredited Land Consultants (ALCs) are more than just land professionals, they are the most accomplished, experienced, and highest performing land experts across the country. They specialize in agricultural land, timberland, ranch, and recreational properties, or vacant land for developments. More information.


The REALTORS® Land Institute named the award winners for the 2013 Outstanding Chapter of the Year,  the 2013 Excellence in Instruction awards, and the 2013 ALC-to-ALC Networking awards, at the 2014 National Land Conference in Charleston, SC, on March 12-14. The awards are an honor among the REALTORS® Land Institute and prestigious Accredited Land Consultant (ALC) professional community.


And The Award For Outstanding Chapter Of The Year Goes To…


The Institute recognized the Iowa Chapter #2 of the REALTORS® Land Institute as the recipient of the 2013 Outstanding Chapter of the Year award. This honor recognizes a chapter that has demonstrated excellence and creativity in member retention, education, volunteering, technology, outreach, and collaboration. The Iowa Chapter is known for “doing it all” and “doing it well.”  The award was accepted by Kyle Hansen, ALC, 2013 Chapter President; Terry Pauling, 2014 Chapter President, and Molly Suarez, Chapter Administrator.


The Excellence In Instruction Award Goes To…


The 2013 Excellence in Instruction awards honored Randy Hertz, ALC Advanced, and Jim Miller, Esq. Both LANDU instructors bring quality, timely, and accurate information to their students. By updating courses and providing up-to-date technology and discussion on current industry laws, they capture the true spirit of businessmen who share and believe in the importance of knowledge and professional development.


The ALC-To-ALC Networking Awards Go To….


The ALC-to-ALC Networking awards recognized Accredited Land Consultants (ALCs) with the most lucrative peer collaboration during 2013. The deals are a clear indication of increased productivity and business expansion from networking among ALCs. Murray Wise, ALC, and Ben Crosby, ALC, won both the 2013 Largest In-State ALC-to-ALC Transaction by Sales Volume, and the 2013 Largest In-State ALC-to-ALC Transaction by Total Acreage.  The Largest National Referral for an ALC-to-ALC Transaction by Sales Volume was awarded to Randy Hertz, ALC Advanced; Terry Rupp, ALC, and Troy Louwagie, ALC. The final award, the ALC-to-ALC Networking Award for Overall Collaboration, was presented to Ben Crosby, ALC; Squire Smith, ALC; Clay Taylor, ALC; and David Hitchcock, ALC Advanced.

We offer congratulations to the winners and look forward to coming years of top-notch work from the RLI members.

(Photo credit: wangkai)


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REALTORS® Land Institute Celebrates 70th Anniversary (Part II)


Frederik Heller, our manager of Library and Archives here at NAR is an invaluable resource for answers about just about every historical aspect of the real estate business.  I’m happy to say Mr. Heller has contributed a fascinating article about the REALTORS® Land Institute and I’ll be posting it here at The Source in a mini-series.  Here’s the second and last installment of “70 Years Of The REALTORS® Land Institute — Plus 24 More”.  Check out the first piece here.– WG

In the years following World War I, demand for farmland was high, and values of farmland were on the rise. As interest in farm property increased and more brokers began to market themselves as farmland specialists, organizations for farm brokers began to form in Ohio, Minnesota, Missouri, and other states. By the end of the decade, farm brokers were ready to set themselves apart and establish their own national organization.

In 1920, the National Association of REALTORS® was preparing to meet in Kansas City in June for their annual convention. A farm broker from Kansas City, Wilbur J. Mansfield, met with the leaders of the NAR to present the farm brokers’ ideas. The National Association was intrigued and approved a special session focused on farm real estate issues to take place at the Kansas City convention.

Mansfield took it upon himself to send out invitations to nearly 7,000 farm & land brokers throughout the country, telling them to meet in Kansas City to explore the possibility of creating a national farm brokers’ organization. Several hundred farm brokers responded and travelled to the convention.

At the Kansas City meeting, the assembled farm brokers spelled out exactly what it was that made farm brokerage different from residential brokerage, or “lot sales”, as the farm brokers called it. C. E. Southwick, secretary of the Minnesota farm brokers’ association, explained the difference this way: “The responsibility of the farm land dealer was even greater than that of the city dealer. The latter sold a man a home but the farm dealer sold, not only a home but also a business.”

The secretary of the Ohio group also put in his opinion, saying that farm brokerage is much more involved: “When selling farm property, it involves the complete investment usually of all our prospect’s money, a move among strangers, severing of family ties and they very often have to barter their future for many, many years to complete their obligation, or purchase…”

The farm brokers argued that they were ethically obligated to increase their knowledge of their business and provide the best possible levels of service to their clients, and believed that the best way to do that was through a national organization focused on the needs of farm property specialists.

From that 1920 meeting came RLI’s ancestor, of sorts: The Farm Lands Division of the National Association of Real Estate Boards, effectively making farm and land brokerage the first recognized professional specialty in the real estate industry. The Farm Land Division was in place and fully active within a couple of years. It was considered such a success that the National Association soon decided to take the idea to the next level, creating similar divisions for other new real estate specialties, including appraisers, property managers, industrial brokers, home builders, and others.

Within a few decades, NAR’s specialty divisions evolved into independent organizations: the Appraisal Division is now the Appraisal Institute, the property managers division became the Institute of Real Estate Management (IREM), the Industrial Division is now the Society of Industrial & Office REALTORS® (SIOR), and so on. Many of the real estate specialties and related services we see today, along with the national organizations that serve and represent them, might not be there were it not for the groundwork laid by the land professionals in 1920.

But despite its influence and initial success, the National Association’s Farm Lands Division didn’t have the same happy ending as the other specialty divisions. By 1925, the Farm Division had over 1100 members, representing almost every state, but after 1925, membership began to take a nosedive. Part of the reason for that was a new policy from NAR, which required that all REALTORS® be members of their local real estate boards; many of the Farm Division’s members operated in rural areas outside the jurisdiction of local real estate boards, and this policy change, instituted in 1923, effectively disqualified them as members. Another reason for the Farm Division’s decline, of course, was economic. Decreasing farmland values, the Dust Bowl, the Great Depression all conspired to drive many farm & land brokers out of the business entirely. The Farm Lands Division pulled just about every trick it could come up with to recruit new members, but no matter what they did, their membership kept going down instead of up. By 1940, the Division had only 9 members left, and the National Association finally made the decision to shut it down.

Even though the Farm & Land Division’s story had taken a wrong turn, the ideas and concepts that started it were still strong. Farm brokerage was now an established specialty in the real estate world, and farm brokers had already experienced some of the advantages of a national organization, and they just were not ready to give it all up.

So it was only three years later that the farm brokers decided to do it all again, and they would create a stronger organization this second time around. And it all came together in almost the same way as it did in 1920. The United States was once again involved in a world war, and the demand for farm property was again on the rise. A few successful state organizations of farm brokers were in operation, most notably in Michigan, which was run by a broker from Flint named George L. Domm. Just as Wilbur Mansfield did in 1920, George Domm almost single-handedly took it upon himself to gather farm brokers from around the country to convince NAR to support their efforts in building a new national organization for farm brokers.

He showed the NAR leadership what he had done with his Michigan farm brokers organization, and how those successes could be applied nationally. The National Association was again intrigued by the possibilities, and set aside time to discuss farmland issues at its 1943 annual convention in Cleveland. Farm property specialists gathered there and passed a resolution demanding that a new national organization be formed to serve their needs.

NAR responded in January 1944 with the formation of the Agricultural Institute, installing George Domm as its first president. The Agricultural Institute went through many name changes over the years before becoming the REALTORS® Land Institute in 1985.

In his welcoming remarks at the recent RLI Land Conference in Charleston, SC, Trident Association of REALTORS® CEO Wil Riley pointed to RLI’s adaptability in serving the ever-changing needs of its members over the years. That adaptability is one of the keys to how the Institute has evolved since 1944, and an element that might have been missing in 1920. The achievements of Wilbur Mansfield and George Domm and all of the men and women who have joined RLI over the years have built a strong, resilient, and truly member-driven organization.

Is A Farmland Bubble Forming?


The story so far: the Federal Reserve in Kansas City mid-2013 published that irrigated cropland in its district rose 30% in 2012, while the Chicago Fed reported a 16% increase. Last year’s drought in Iowa last year notwithstanding, farmland prices have nearly doubled since 2009 to an average of $8,296 an acre. Prices in Nebraska, says the Fed, have also doubled during the same period.

There’s a complicated set of factors joining together to drive up farmland prices. Drought, institutional buying, ethanol mandates from the federal government, rising food prices and population concerns are all having their say in a steadily rising price for irrigated cropland. Some are saying the trend is unsustainable and shows all the signs of a classic market bubble. Troublingly, different looks at the market come to similar conclusions about a coming price collapse even if there’s disagreement about cause.

Institutional Players

As Reuters reported recently, a report by The Oakland Institute documents a “global land rush of unprecedented scale” and estimates $10 billion in institutional dollars is chasing the fixed amount of US cropland.  Pension giant TIAA-CREF, Hancock Agricultural Investment Group and UBS Agrivest were singled out as key drivers of a surge in farmland prices.  This financialization of food-producing land is identified as “speculative” by the report.

Generational Turnover And Tight Credit For Small Farmers

Another trend feeding the charge toward institutionalized demand for land is the plight of the young farmer. A 2011 survey published by the National Young Farmers Coalition found that 78% of young farmers cited lack of capital as their biggest challenge.  Depending on off-farm income to make ends meet only further sweetens the deal to a young farmer when an institutional player comes calling to pad its asset holdings.

Biofuel Mandates

In 2005, Congress passed the Energy Policy Act of 2005, setting the stage for later mandates by the Environmental Protection Agency to compel an increase in the production of ethanol, the corn-based fuel. The EPA’s RFS and later RFS2 programs sought to almost quadruple ethanol production. The effect of government policy into land prices is highlighted by one analyst at Seeking Alpha when he points to a spike in land prices that occurred in the 2005 quarter the bill passed.

While that price move explanation seems valid, what’s less clear is any similar ongoing related effect of ethanol mandate on corn-producing land prices in the intervening nine years. As per usual, when it comes to explanations of prices from institutional sources, only some actors get attention. The Wall Street spin evident in the above-linked piece focuses only on Washington and ignores totally the fact or any possible effect of $10 billion Wall Street dollars wading into the market, as well as the plight of the farmer strapped for credit and capital.

Prices Stabilizing For Now

The Fed reports that land prices in late 2013 only gained 3%, but also touched on the farmer’s plight, indicating cash rents (and food exports) were in fact up:

Cash rents, another key indicator of farmland value, were also steady to higher as farmers negotiated contracts in the fourth quarter that will cover the 2014 season, according to the St. Louis Fed. Values were buoyed by a gain in farm incomes in the quarter, including crop insurance payments and much larger harvest supplies even at lower prices.


In recent years, both crop and farmland prices have set records as the boom in biofuels and food exports fueled demand. But the sharp drop in second-half 2013 grain prices ahead of the record corn harvest had bankers fretting that farmland prices could also plunge.

With land acting as security on most loans to farmers for equipment, and a persistent credit crunch facing farmers quarter after quarter, signs are piling up that the value of mortgaged food-producing land is headed for a slip. When, as WSJ reports, tractor company John Deere revises its farm equipment sales projections to 5% from the 10% thought a year ago, that’s only one of a set of signals that a land boom driven by Wall Street may be coming to a close.

The Ultimate “Dirt Business” Domain Name Is Up For Sale

Domain Names

The commercial real estate business has long had its online counterparts: bustling markets in online development (aka web sites) and space rental (aka hosting) are each circulating many billions a year as the commercial internet moves into its third decade.  That includes the market for internet domain names, the closest thing the web has to a location-based property market.


The parallels between real estate and online real estate are far from perfect, but the two do share one immutable principle: location drives commercial property value. Online, the closest analogue to how physical location works in commercial real estate is expressed in the way brands and domain names work online. As a commercial property’s prime physical location attracts traffic and commerce, so to with the prime domain name, a word/brand that nobody needs to search for because it’s so memorable. Earning “mindshare” or high traffic online with an unforgettable domain name is akin to earning the favorable traffic patterns and proximities that only come with prime commercial real estate.

The market in internet domain names is a fascinating value laboratory. Wikipedia’s list of the 21 Most Expensive Domain Names is worth a look, demonstrating eye-popping sums, some of which makes sense, some of which are head-scratchers dating back to the first internet bubble of the late 1990s. The average price in dollars of the top 20 domain names at press time: $7.68 million 


In my opinion, the site best dedicated to the exchange of internet domain names is Flippa, itself a domain name based upon real estate slang (“flipper”). During a recent visit, I spotted the Flippa listing for and immediately thought of the real estate connotations. (Important note: I do not know the seller and have no relationship with the site — I just don’t commonly see a prime real estate domain name up for sale that often and thought it would make a neat post.)

Dirt Is A Four-Letter Word

At a premium in the domain name space are domains with few letters, as these were snapped up relatively early in the commercialization of the internet in the middle 1990s. is one of these, having been registered first in 1995.

Beyond its brevity, has brand value in multiple applications. Check out this fun excerpt from the sales listing: has so many applications, they are almost too numerous to list. As far as motivation, a four letter, top level domain name such as this only comes along once in a long while. Buyer Motivation comes from scarcity and the yearning for building a world class brand.

Here is list of potential “category killing” opportunities for the domain:

  • Celebrity Gossip
  • Political Gossip
  • Reputation Management
  • Cleaning Supplies 
  • Cleaning Services
  • Organic Supermarket
  • Organic Superstore
  • Outdoor Supplies
  • Tools
  • Vacuum Cleaner
  • Outdoor Superstore
  • ATV superstore
  • Dirt Bike superstore
  • Landscaping directory 
  • Landscaping supplies
  • Outdoor Contractors
  • Scandals
  • Motocross Superstore
  • Background Checks
  • Social Reputation 
  • Big Data
  • Adult
  • High Schools Sports
  • College Sports
  • Pro Sports
  • Sports Niche
  • Outdoor Niche

Did you notice which one they forgot? Land!

(Photo credit: ivanpw)

Commercial Real Estate Industry Weekly Roundup

Roundin’ Up The News

Patrolling the media for the latest in commercial real estate news, it’s the Commercial Real Estate Industry Weekly Roundup:



Office Sector

Industrial Sector

Retail Sector

Multifamily Sector

Hotel Sector

Land Sector

SCOTUS Turns Again To Takings And Land Use

U.S. Supreme Court building.

The Supreme Court gets to pick what cases it hears — and land is on the court’s mind lately.

Thousands of requests for cases are received every year by the Supreme Court. Each sitting justice has a crew of law clerks reading each request (called a petition or writ of certiorari) and these clerks compile memos about each case.  The justices read these memos, meet and vote, and if four of the nine agree to hear a case, then it is placed on the docket.   If enough justices don’t feel particularly compelled to hear a case, then the lower court’s judgement stands.

For whatever reasons, the pattern for the Roberts-led Supreme Court has been heavy on the land use and eminent domain related cases under the Fifth Amendment’s clause ” nor shall private property be taken for public use, without just compensation”.

Recent SCOTUS decisions in this area have gone against government and for land owners, including:

  • Koontz vs. St. Johns River Water Management District (as I wrote about at The Source here and here):  A Florida land owner was ordered as a condition of development of land he owned to improve drainage on an unconnected land parcel owned by the state and managed by the Management District.  SCOTUS eventually ruled in favor of the land owner.  The decision’s effect in other states is likely to handcuff local governments / permit-issuing authorities in what conditions they can attach to land development permits.
  • Arkansas Game And Fish Commission vs. United States:  SCOTUS ruled that seasonally recurring, temporary flooding of land can constitute a taking entitled to just compensation.
  • Horne vs. Dept of Agriculture:  Where the court affirmed the right of California raisin growers to claim a taking as a defense to enforcement action made by the government due to alleged non-compliance with regulatory efforts.  This case reversed a long-standing  lower court case from the 1980s that has stood in the way of takings claims. The reversal has also shown that “just compensation” is no longer the only remedy a party claiming a taking can request.

Before the court now is Marvin M. Brandt Irrevocable Trust vs. United States, a land use case that will be of interest to any broker, owner or developer of land with railroad right-of-ways.  While complex, the case will decide issues concerning whether interest in land with such right of ways is held as fee simple or as an easement, and what happens when railroad use is discontinued.

The ramifications of Brandt will likely touch all 137,000(!) miles of railroad crisscrossing the US, meaning it’s a good idea to stop, look and listen for the decision in the spring.

Release The Bakken: The North Dakota-Montana Energy Boom

The Bakken-Three Forks Shale Formation
(The Bakken-Three Forks Shale Formation)

Since the recent development of hydraulic fracturing drilling technology in 2008, vast deposits of US oil and natural gas trapped in shale formations have become reachable, spiking prices for land and development leases in locations not associated with such booms since the 19th century gold rush. The names of shale formations on the lips of property professionals across the country seem to have turned them into amateur geologists.

Rising chatter in the land business includes names such as Monterey Shale (2,000 square miles running north and south through the center of California), Barnett and Eagle Ford Shale (Texas) Utica Shale (most of New York, Pennsylvania, Ohio, and West Virginia) and the most eye-popping of them all, the Bakken Shale in North Dakota, South Dakota and Montana.

Shale Far Below, Cap Rates Far Above

The rush to extract the Bakken’s natural gas and oil has produced unexpected volumes of energy, as well as a radically shifted market for some North Dakota land. As the area struggles to accommodate the tidal wave of energy workers that has driven unemployment in North Dakota to below 4%, genuinely rare business conditions prevail.  A quick look around found a trailer park in far northwestern ND is commanding a 24% cap rate and 100% occupancy, one sign among many that a full-bore boom is underway in the Roughrider State.

“An Industry, Not A Boom”

The cycles of capitalism have been historically clear: after boom follows the bust. But will it here?  No, says Tom Rolfstad, executive director of the Williston Economic Development Corporation. During the Bakken Chicago Summit held yesterday. Rolfstad spoke about the oil industry, an industry that has been growing at an amazing clip in North Dakota’s Bakken region.

Thanks to new technology — and fracking — the oil wells in this region of the state are producing more oil than ever. And Williston — a municipality located in the center of the region — is dealing with its own growth because of it. Williston’s population is booming. And the municipality needs everything from apartment units and grocery stores to gas stations and permanent housing. This means there are plenty of opportunity for investors in this region, investors from the Midwest and beyond.

And Rolfstad disagreed that that oil industry in his part of North Dakota is experiencing a boom. A boom, he said, ends quickly. The oil surge in the Bakken, he said, is showing few signs of a quick slowdown. “The oil industry here is going to be around for another 60 years, at least,” he said. “That’s a long time. We’ll be around in 60 years. Will you?”

Upcoming Book Illustrates The Marketplace

The Natural Gas Revolution: At The Pivot Of The World’s Energy Future is a title by Robert Kolb expected to publish this year.  The book lays out the history, costs, benefits and likely future of the post-fracking US energy market, with special attention paid to the Bakken and North Dakota.


Farmland Rental Rates Lagging Rising Land Values

Farmland in the USA. The round fields are due ...

The USDA’s semi-annual survey on the state of farm finances, called the Agricultural Resource and Management Survey (ARMS) is “the only national survey that annually produces observations on field-level farm practices, the economics of the farm operating the field, and the characteristics of farm operators and their households”.  This year’s ARMS look at the economics of farm operations is showing a race between rented and purchased land prices, both rising, but one lagging the other significantly.

Owning Vs. Renting Markets

Ownership means less in the land use picture than in other lease-driven sectors. Typically, rented farmland is worked according to the needs of the renter, not the landlord.  Leases are often informal. According to the most recent survey, 93 percent of producer/respondents say the landlords aren’t involved in the decisions about land use, crop or livestock selection.  That said, the booming market in farmland might suggest that capital is flowing to such deals from distant capital centers.

Not so, says the survey.  75% of landlords live in rural areas within the state where the farm is located.  About 17% of those are within the state, but in “urban” areas (rated as populations over 10,000).  Only 8% of farm landlords live out of the state, according to the USDA study.

The average US farm has approximately three rental agreements in place. These might include fixed or flexible cash rent, crop share and even free rental agreements. As the farm size rises, the number of rental agreements increases.

According to presenters at Farmland  Leases: Tales, Types and  Trends, a conference sponsored in November 2012 by the Chicago Federal Reserve, higher crop prices are forcing changes in rental agreements, requiring renters to make extra payments, often based on crop prices and yields. Even so, cash rental rates are lagging ownership prices in farmland.

Iowa Farmers Warn Of Land Price Bubble

Rental and ownership looking flush as it is, who’s on the bearish side?  Farmers.

Some producers see bad weather coming in ag land prices.  A statewide poll of Iowa farmers returned an alarmingly high percentage of farmers agreeing that farm land price levels are unsustainable.

A majority of the farmers responding to a statewide poll believe Iowa farmland is overvalued and prices are much higher than the land is worth.

Sixty-eight percent of the producers responding to the 2012 Iowa Farm and Rural Life Poll agreed that farmland values are too high and cannot be sustained at current levels. Forty-eight percent agreed that “the farmland market is in a bubble that will eventually burst and lead to major drops in values.”

Other farmers were more optimistic, with 41 percent believing that land values will continue to rise, but at a slower pace. More than 60 percent of the poll participants agreed that quality cropland is still a good investment.

Asked to rate the impact of a number of factors on recent farmland price escalation, 85 percent agreed or strongly agreed that high corn and soybean prices was the most influencial factor driving higher prices. Seventy-two percent believe competition between neighboring farmers who want to expand their land also is a major influence boosting land prices at auctions.

Two-thirds or 66 percent of farmers indicated that low returns on other types of investments was a strong or very strong influence. Seventy-one percent of survey respondents agreed that rising land prices have led to intensification of farming.

Somewhere between the bear and the bull lies the barn.  What will its future hold?  Is a kind of financialization of farmland underway where non-operator owners will ultimately make a killing but leave the operators in a lurch?  Or is the explosion in population and food demand a built-in support for land prices and rents?  Time will tell.

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