Lay of the Land Market Report Fall 2012

Fall 2012

The Lay of the LandFrom the Florida Land Experts at CBC Saunders Real Estate

Market Report

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Introduction...........................................................3

Farmland - Central & Southwest Florida................4

Citrus Land - Central Ridge.....................................5

Citrus Flatwoods - Central & Southwest Florida....6

Citrus Flatwoods - East Central Florida..................7

Ranchland/Timber/Recreational.....................8 & 9

Residential Development Lots.....................10 & 11

Conservation Easements.............................12 & 13

Your Land Experts........................................14 & 15

Table of Contents

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3

Introduction

“The best investment on earth is earth.”

~Louis Glickman

“We document

bona fide sales for

our own use and we

decided to publish the

information. We are

frequently asked by

landowners, clients, and

even appraisers about

land values. We felt it

was needed information

to share.”

~Dean Saunders, ALC, CCIM

Through my many years of studying the land market, I have thought through how to evaluate sales to bring to you a usable Florida land market report. My desire was to base it upon actual market data and not just perceived impressions of the market.

Several years ago, I started investing heavily in technology,

mapping, and staff that would begin to allow this process to start. After several attempts to get it right by first tracking our own sales, we then expanded into tracking sales of certain property types throughout the peninsula of Florida.

Dean Saunders, ALC, CCIMPresident, Land Broker

Coldwell Banker Commercial Saunders Real EstateLakeland, FL

Not only are we verifying sales ourselves, but we are working with our appraiser network in this endeavor to identify the bona fide sales.

This has been an exciting process that continually evolves in scope. It has not been easy or fast, but it has been an on-going effort culminating in goals of accuracy and improvement.

We are pleased to bring to you this inaugural Lay of the Land Market Report as our first land market analysis. We hope you will find it useful and that the information in this report might give you a resource that could help you to make decisions.

Please give us your comments and feedback to help us make it better for you.

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Farmland - Central & Southwest FloridaPolk, Osceola, Hardee, Highlands, DeSoto, Okeechobee, Manatee, Sarasota, Charlotte, Lee, Collier, Hendry Counties

Ben GibsonFarm, Ranch, Citrus

Land SpecialistState Certified General Real Estate Appraiser

Sales ActivitiesThere has been little sales activity for permitted farmland in the Central Florida and southwest Florida growing regions. The last known sale of permitted farmland was 600 +/- acres located in Okeechobee County, which sold for $5,510 per acre of uplands. The property was being used for growing potatoes.

In eastern Manatee County, a 2,000 +/- acre tract was purchased by an area farmer for $3,500 per acre. The property was highly improved pasture with 230 +/- acres of existing farmland. The buyer immediately began the process of permitting the remaining acreage for row crops.

ValuesEven with the lack of sales activity, we believe that good quality, irrigated farmland located in the Immokalee (Collier County) and Palmetto (Manatee County) growing regions should have market values between $7,000 to $8,000 per farmable area. The primary use remains for growing tomatoes.

Values decline as you move into the interior counties of Polk, Hardee, DeSoto, Highlands, and Okeechobee Counties with typical values ranging from $5,000 to $6,000 per farmable acre.

Market TrendsThe demand for farmland in the farming regions of Immokalee in Collier County and Palmetto in Manatee County are primarily driven by the tomato industry. However, low tomato prices for the last several seasons have significantly reduced expansion plans for long-time tomato growers. In turn, this has affected the demand for farmland in these areas.

Recently, the Florida Tomato Exchange, which represents a majority of Florida growers, filed a formal complaint with the United States Commerce Department that Mexican growers were dumping tomatoes in the U.S. market at below their cost of production. Preliminary rules have favored the Florida tomato growers.

A recent trend nationwide is the interest in acquiring farmland by “equity fund groups” as an alternative to more risky investments. These groups are targeting farmland that can be leased to area farmers for a 5% capitalization rate back to the investors.

Currently this trend is beginning to be observed in Florida but the rental rates on the majority of our row crop operations do not lease at rates (typically $200/acre to $400/acre), which provide the investor with a 5% annualized return.

5

“I would give a thousand furlongs of sea for an acre of barren ground.”

~Shakespeare

Sales ActivitiesOver the last year, citrus groves in the central/ridge region of the state have continued to have a high level of demand. Although recently, the uncertainty in juice prices seems to have somewhat tempered interest. Generally, for the three-county region, there were approximately 50 arms-length citrus grove transactions with a large majority being located in Polk County. That is a relatively low number and is reflective of the limited supply of groves for sale.

The transactions that occurred can be roughly characterized as being in three categories, primarily based on production and overall quality as very good, good to average, and fair. Location, infrastructure, and other factors also impact the prices paid. In today's market however, groves located in more urban areas or those that have been entitled for some type of future development are given less of a premium than in the past due to the decline in demand for development properties. The long-term value of those attributes does seem to still have some influence on prices, but only nominally.

Additionally, a significant increase in demand for land suitable for planting to citrus has occurred. Properties once intended for development are now being purchased by buyers for replanting to citrus. Many of those tracts were lender-owned and entitled for development and even

Richard Dempsey, ALCFlorida Land

and Citrus Specialist

Citrus - Central RidgePolk, Highlands, Lake Counties

included water and sewer tap allocations. However, the primary consideration is given to soils and other positive citrus-growing attributes. Those ridge area sales have occurred in the $6,000 to $7,000 per acre range.

ValuesThe groves sold ranged in size from about 20 acres to over 128 acres. The prices before consideration for the current fruit crop ranged from $6,000 to just over $22,000 per acre.

Roughly 25% of the transactions were in the $6,000 to $10,000 per acre range, 50% in the $10,000+ to $15,000 per acre, and 25% in the $15,000+ and up range. The three largest sales were in the 100 to 125 acre size and sold for between $13,000 and $16,000 per acre. A 240-acre parcel sold this year but it was a foreclosed property with a high percentage of poor quality or dead trees. The tract was not marketed and was not considered an arms-length transaction.

Market TrendsThe demand for high-quality groves appears to remain strong. Regardless of the state of fruit prices, historically, very good quality, well-located groves will be in demand. The number of grove listings for average and lesser-quality groves seems to be increasing. However, until fruit pricing expectations are better known, the market may be a little hard to interpret.

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Citrus Flatwoods - Peace Valley Region & Gulf Citrus RegionHardee, DeSoto, Manatee Sarasota, Charlotte, Hendry, Lee, Collier, Glades Counties

Sales ActivitiesAlthough there is significant interest in purchasing citrus groves, there has been little sales activity for groves. Hardee County is the 5th largest citrus-producing county in the State of Florida, but for the first eight months of 2012, there have been only seven reported sales of citrus groves greater than 15 acres in size.

In southeast Hardee County, a high-quality 100 +/- acre citrus grove was purchased for $20,000 per acre, including the fruit crop, which was estimated to be 520 boxes per acre. In addition to the grove, the sale included 820 acres of pasture, which was purchased at $2,000 per acre.

In south Hardee County, an 80-acre citrus grove with 65 +/- net tree acres was purchased for $13,800 per net tree acre, including the fruit crop, which was estimated to be 330 boxes per net tree acre.

In the Gulf Citrus Region, CBC Saunders Real Estate marketed a July 2011 sale of 1526 +/- net tree acres of citrus, producing 350 boxes/net tree acre for $13,925,000 including fruit crop.

ValuesAn average quality citrus grove producing approximately 300 boxes per acre should continue to have values of $9,000 per acre to $10,500 per acre. These values would not include the fruit crop. The values would depend on the condition of the grove and the amount of rehabilitation that has been completed or needs to be completed.

Market TrendsDepending on fruit prices for the upcoming 2012/2013 season, owners of high-quality groves should continue to expect to be paid high prices for their properties.

Ben GibsonFarm, Ranch, Citrus

Land SpecialistState-certified General Real Estate Appraiser

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7

“He is not a full man who does not own a piece of land.”

~Hebrew Proverb

Jeff Cusson, CCIMAgricultural, Transition,

IndustrialLand Specialist

Sales ActivitiesInterest in orange blocks has moderated a bit, as juice prices have corrected substantially from the run-up of last year.

Large crops in Brazil and early estimates of a strong orange crop in the state have driven juice prices down from a peak in mid $2.00 per pound solid range last season to the projected $1.50 per pound solid range this season.

Grapefruit prices have been stronger for the past couple of years, as production within the state appears to be well matched with demand. State grapefruit production has settled in at about 20 million boxes per year, a substantial correct from the mid 50 million boxes per year we produced in the 1990s. Packing houses remain fairly bullish with expectations of fairly strong prices for grapefruit and specialty fruit continuing.

ValuesGrove values vary substantially based upon conditions, varieties, and projected cash flows. Risk-adjusted values appear to be creating potential opportunities with grove prices moderated and grapefruit income improved. Two grapefruit groves sold last year: 187 +/- acres for $7848 per acre and 178 +/- acres for $8422 per acre.

Several former citrus groves have sold recently with plans to replant or transform to other agricultural uses. Values for these bedded lands with a drainage infrastructure in place have been in the $2500 to $3500 per acre range. Asking prices on groves vary substantially from the $4000 per acre range for older groves that are just covering production costs to as high as $12,000 per acre range for younger producing groves with good access.

Market TrendsThe east coast continues to suffer declines from the impacts of greening, canker, and the lingering impacts of the hurricanes of 2004 and 2005.

This area has seen the total commercial citrus acreage shrink from over 200,000 acres in 2000 to less than 80,000 acres last year. There are, however, some bright spots on the horizon. Production practices to offset and control these diseases seem to be having a positive impact on sustaining the groves and setting viable crops.

Trees for replanting are becoming more readily available and substantial plantings are starting to take place. We are also starting to see more diverse forms of agriculture coming into the area, taking advantage of the low land prices and strong drainage and irrigation infrastructures.

Citrus Flatwoods - East Central FloridaIndian River District Florida, Indian River, Saint Lucie, and Martin Counties

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Ranchland, Timberland, Recreational LandPeninsular Florida

Ben GibsonFarm, Ranch, Citrus

Land SpecialistState-certified General Real Estate Appraiser

Dean SaundersALC, CCIM, Broker

Florida Land and Conservation Easements

Sales over 500 AcresCounty Sale Date # Acres** Sale Amount Per AcrePutnam 6/26/2012 8,537 $11,346,600 $1,329 Charlotte 5/30/2012 5,686 $17,980,100 $3,162 St. Johns 8/10/2012 4,859 $5,000,000 $1,029 Hardee* 5/1/2012 4,072 $9,161,900 $2,250 Polk* 6/11/2012 3,630 $9,076,500 $2,500 Clay 3/28/2012 2,727 $6,832,500 $2,526 Marion 6/18/2012 2,494 $7,041,600 $2,825 Marion 3/23/2012 2,112 $5,174,400 $2,450 Marion 6/26/2012 1,900 $2,328,100 $1,225 Hendry 5/1/2012 1,294 $7,350,000 $5,680 Brevard 7/17/2012 1,249 $1,215,000 $973 St. Lucie* 2/2/2012 976 $2,678,200 $2,744 Columbia 1/19/2012 947 $1,456,000 $1,537 Hardee 1/25/2012 858 $1,992,700 $2,323 Levy 3/15/2012 769 $1,850,000 $2,406 Lake 1/18/2012 612 $1,350,000 $2,206 Clay 6/1/2012 607 $3,773,600 $6,217 Okeechobee* 1/4/2012 545 $812,700 $1,491 Manatee* 9/9/2012 533 $900,000 $1,689 Orange 7/13/2012 514 $2,124,000 $4,132 Lake 3/2/2012 506 $1,100,000 $2,174

*Marketed and sold by CBC Saunders Real Estate**All acres are +/-

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Sales Activities: Sales activity continues to be slow for large acreage properties throughout the state. Over the last year the market was influenced by the foreclosures and subsequent sales by lending institutions. The north Central Florida market has been influenced by one large buyer, who is actively purchasing large tracts of land to convert to cattle grazing to establish a grass-fed beef operation.

There is interest in recreational tracts, but until the overall economy improves, we will see demand remain tepid. Purchasing land for recreational use will be dominated only by those high-net-worth individuals who are able to purchase non-income producing tracts.

Values: We have seen land values decline over the last several years and do expect that to continue until the economy improves and demand picks up. Until then, there will continue to be a softening in interest for large acreage tracts. A significant number of potential buyers continue to “wait on the sidelines” for land values to reach the bottom of the market.

“The small landholders are the most precious part of a state.”

~Thomas Jefferson

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Development LandResidential Lots, Entitled Land, Home Sales - Polk County

David Hitchcock, ALCTaylor-Hitchcock TeamResidential Dev. Lots,

Land Specialist

Clay Taylor, ALCTaylor-Hitchcock TeamResidential Dev. Lots,

Land Specialist

Housing Completions-Available Finished LotsThe hot areas for housing completions in Polk County are Lakeland and the Four Corners area in northeast Polk County. Of the 854 completed houses in July 2011 through June 2012, 740 or 86% where located in these areas. This shows that growth is occurring in the areas that have jobs or areas that are close to major job centers.

Overall in Polk County, there is an overabundance of finished single family residential lots. A recent count shows an availability of almost 11,000 lots.

With the mentioned housing completions of 854 houses, we have almost a 13-year supply of lots. This is not all bad. Home prices for the consumer should remain lower since builders can take advantage of distressed lot prices and pass on the savings to them.

Residential Sales OutlookThere were 7,982 homes sold in Polk County from July 1, 2011 to June 30, 2012. At the end of the third quarter of 2012, there were 3,301 active listings on MLS.

South Lakeland - Made up of the zip codes 33803, 33813, 33812, 33860, 33811 and 33846 for this study, accounted for 1,242 home sales, which is 15.56% of the county’s total.

Home sales in Lakeland led the county in price with an average sale of $144,427, while the rest of the county had an average of $107,498.

Lakeland - Lakeland as a whole (including North Lakeland) had 29.39% of the sales in the county. Jobs, shopping and restaurants are all more abundant in Lakeland than anywhere else in the county.

Davenport and Poinciana - This area is made up 43.65% of Polk County’s home sales. These two areas are 20 minutes from St. Cloud and Kissimmee and 30 minutes from Orlando. The average home sale price in the two areas was only $114,821. Even though housing may be a lower-end product, homes are selling because of access to jobs, shopping, and restaurants.

Winter Haven - 12.54% of the residential market with an average of $106,302, Winter Haven can hold its own with jobs, shopping, and restaurants with close proximity to Lakeland, especially the Polk Parkway. LegoLand also opened in October 2011.

Remaining Polk County - The rest of the county had poor activity, with Bartow, Auburndale, Haines City, Lake Wales, Frostproof, and Fort Meade only combining for 14.42% of the home sales with a low-average price of $94,392.

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“My own recipe for world peace is a bit of land for everyone.”

~Gladys Taber

Polk County Home Sales Total Total $$ Average $ Median $North Lakeland* 1,104 $109,447,695 $99,137 90,000South Lakeland* 1,242 $179,378,864 $144,427 120,000Bartow 181 $13,627,930 $75,292 60,000Auburndale 243 $28,270,771 $116,341 100,000Winter Haven 1,001 $106,407,962 $106,302 85,000Lake Wales/Frostproof 384 $32,785,474 $85,379 69,000Haines City 343 $33,961,681 $99,014 87,500Poinciana 2,203 $229,078,276 $103,985 89,000Davenport 1,281 $170,960,616 $133,459 125,000Total 7,982 $903,919,269 $113,245 96,900

*Lakeland (North & South) 2346 $288,826,559 $123,114

Residential Certificates of Occupancy* in Polk County• 43.65% Davenport/Poinciana• 46% Lakeland • 12.54% Winter Haven• 14.42 % Bartow, Auburndale, Haines City, Lake Wales, Frostproof, Fort Meade

*Certificates of Occupancy designate homes built but not necessarily sold or occupied.

Entitled LandLand with entitlements, which allows more dwelling units (at some density) than agricultural land, is not proving to have any value right now. With the abundance of vacant finished lots and the available homes for sale, entitled land has little, if any, more value than agricultural land.

NorthLakeland

Davenport

Haines City

SouthLakeland

Auburndale

Winter Haven

LakeWales

Poinciana

Bartow

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Conservation Easements

Dean SaundersALC, CCIM, Broker

Florida Land and Conservation Easements

OverviewState budget woes continue to sideline the State and Water Management Districts from making any significant land or conservation easement purchases. However, the United States Department of Agriculture (USDA) has been very active in purchasing conservation easements through the Wetlands Reserve Program (WRP) and the Grasslands Reserve Program (GRP). They recently closed on eight different WRP easements in Hendry, Highlands, Polk, and Okeechobee Counties. The easements were contracted in 2011 and the Geographic Area Rate Cap (GARC) values for 2011 were: (see table). Contracts for the 2012 cycle were recently signed and should close in mid-2013. Again the focus seems to be in Hendry, Glades, and Highlands Counties.

The Farm BillThese programs are authorized by the Farm Bill - the legislation adopted every five years that establishes federal agricultural policy.

With increasing federal debt and budget deficits, many programs within USDA are facing significant funding cuts. The 2008 Farm Bill expired on September 30, 2012 (the end of the federal fiscal year) and Congress did not finish work on a new Farm Bill. So as it stands now there is no Farm Bill

yet and therefore no money available for the conservation programs administered by USDA.

The Everglades Headwaters Natural Wildlife Refuge and Conservation AreaThe US Fish and Wildlife Service recently established The Everglades Headwaters Natural Wildlife Refuge and Conservation Area (see map) in Polk, Highlands, Okeechobee, and Osceola Counties. Their goal is to purchase primarily conservation easements; although some lands will be purchased in fee title. Funding, as usual, is the critical issue - there really isn’t much to speak of - this year $1.5 million was allocated to the project but no purchases have been made thus far. In addition to the Headwaters Project, US Fish and Wildlife Service is considering creating two more Conservation Areas; one for Fisheating Creek and another in southwest Florida.

SummaryDecisions on funding for both the Farm Bill conservation programs and the new Everglades Headwaters National Wildlife Refuge will not be determined until after the election and things have settled down a bit.

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Everglades Headwaters National Wildlife Refuge and Conservation Area

“Conservation is a state of harmony between men and land.”

~Aldo Leopold

Improved Pasture $4,400 $3,212Semi-improved Pasture $3,400 $2,482Natural Lands $2,900 $2,117Wooded/Forested Land $2,900 $2,117Wetlands (Functioning) $2,500 $1,825Crop (Organic/Muck Soils) $8,000 $5,840Crop (Non-irrigated) $3,000 $2,190Crop (Irrigated) $7,000 $5,110 $2,555

Land Use TypeGeographic Area Rate Cap (GRAC)

Fair Market Value GARC

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Your Land Experts

Dean Saunders, ALC, CCIMPresident, Land BrokerFlorida Land and Conservation Easement Expert

Dean is a sixth-generation Floridian with a strong agricultural background and is a recognized expert on conservation easements and Florida land. As a former legislator, he assisted in the creation of important conservation and property rights legislation. He served as Agricultural Liaison, Special Assistant, and Director of External Affairs to US Senator and then Florida Governor Lawton Chiles. He has received the #1 Global Sales Professional recognition in the CBC affiliate network multiple times and leads the company to a variety of top national and regional awards for outstanding sales performance. Under his leadership, the company has been listed in The Land Report as one of America’s Top Brokerages every year since the recognition’s inception.

Dean also authored the benchmark award-winning consumer publication We Create Solutions: A Primer on Conservation Easements and produces a series of popular Florida Land Conferences on a variety of land market subjects.

LayOfTheLandReport.com

View Dean on video talking about the Lay of the Land Market Report at:

Clifford M. Bowen, Jr, SRAAgri-Property Consultants, Inc.Ft. Myers, FL239.936.404 / [email protected]

Clifford Bowen - State-certified General Appraiser #RZ376Dan Ceilley - State-certified General Appraiser #RZ3351

Philip M. Holden, MAIS.F. Holden, Inc.Palm Beach Gardens, FL561.626.2004 / [email protected] General Appraiser #RZ 1666

Appraiser Network

Ben GibsonBradenton, FL941.737.2800 / [email protected] General Appraiser #RZ 1740

C. Michael SeneyArea Real Estate Appraisers, Inc.Winter Haven, FL863.294.2384/ [email protected] General Appraiser #RZ 2558

Scott BrodbeckLegacy Appraisal ServicesGainesville, FL352-378-8966/ [email protected] General Appraiser #RZ3386

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The information provided in the Lay of the Land Market Report is based upon verified, bona fide sales data tracked by the Coldwell Banker Commercial Saunders Real Estate sales agents and business staff over a period of time for specific land segments. Analysis is defined by this data, along with our experience in the market. This information may not be complete, If you have additional information to contribute, please give us a call.

This market report was made possible by CBC Saunders Real Estate land professionals, staff, and the professional appraiser network.

Donovan JonesReal Estate Analyst, GIS Mapping Specialist

Donovan is a 13th generation Floridian. For the company, he provides tracking of Florida land sales in targeted property types, coordinates and manages sales data, as well as GIS mapping requirements.

“Find out where the people are going and buy the land before they get there.”

- Will Rogers

Richard Dempsey, ALC Large Acreage, Citrus, Development Land Specialist

Richard specializes in large acreage tracts, citrus groves, and development properties and has been a state-certified general appraiser. He has received numerous top industry awards and elected 2011 Realtor® of the Year by the Lakeland Association of Realtors®. He is the Florida Realtors® 2012 District 10 Vice President

Ben GibsonFarm, Ranch, Citrus, Land Specialist

A 5th-generation Floridian, Ben’s family has a long history as citrus growers. He is a state-certified general real estate appraiser with over 26 years of appraising agricultural properties.

David Hitchcock, ALCResidential Dev. Lots, Entitled/Unentitled Land SpecialistDavid’ is a thirty-year veteran of the Florida Agribusiness industry with a strong background in citrus, industrial, and agricultural businesses. His specialties include Central and South Florida agricultural properties, agriculture transitional properties (transition-to-next-use) and land use issues.

Clay Taylor, ALCResidential Dev. Lots, Entitled/Unentitled Land SpecialistClay specializes in development land (finished lots, subdivisions, and entitled acreage), agricultural land, hunting, recreational tracts, and ranches. His background includes 23 years with the Polk County School Board as a teacher and defensive back coach, and championship defensive coordinator. He has received top sales awards from Coldwell Banker Commercial.

Jeff Cusson, CCIMAgricultural, Transition, Industrial, Land Specialist

Jeff specializes in agricultural and transition properties, industrial, and general commercial real estate. He has a masters degree in business, a strong family background in Florida agriculture and has received top sales awards from Coldwell Banker Commercial.

©2012 Coldwell Banker Commercial Saunders Real Estate, All rights Reserved, Worldwide. Coldwell Banker Commercial and the Coldwell Banker Commercial Logo are registered service marks licensed to Coldwell Banker Commercial Affiliates. Each Office is Independently Owned and Operated.

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