Land, as far back as anyone can remember, has been considered a most valuable commodity – an idea Mark Twain captured in his simple quote, “Buy land, they aren’t making it anymore.” Here in North Harris County, Montgomery County, and most of the Greater Houston area, real estate participants are embracing Twain’s philosophy and buying land at a substantial pace.
The amount of land sale activity is no surprise considering local market conditions. The area’s rapid employment growth, pro business environment, and the quality of life for Houston residents all influence the real estate market and work to create desirable land opportunities. Major developments in the area, like the new ExxonMobil corporate campus, will continue to fuel demand for commercial land in the foreseeable future.
Why this land site and how is it valued?
Land owners, commercial real estate investors, and property developers always ask the question, “What can my site be used for and what is it worth?” The Highest and Best Use is determined by what land use will generate the greatest cash flow and value for that property. Highest and Best Use is influenced by the basic concept of supply and demand. Supply represents how much the market can offer, while demand refers to how much of a product or service is desired by buyers. All land sites are unique and affected by ever-changing market conditions. This makes the task of calculating supply and demand for available land only more complex and time consuming. Development plans or marketing may need to be modified to reflect and capitalize on unanticipated trends.
In this same vein, Market Value is an important guideline used by real estate professionals and appraisers to determine the probable value of a tract of land. The factors they consider include the land parcel’s size, shape, road frontage, visibility, and location at a signalized intersection. Other factors like public utilities or environmental issues, and local conditions in a community also have an impact. Ultimately, Fair Market Value occurs when a willing Seller and a willing Buyer agree on the land’s value and strike a transaction. Through their daily participation and activities, market experts reach out to their counterparts and customers to discuss market trends, track recent comparable sales, and review current listings in order to keep abreast of the items that affect a property’s Fair Market Value.
Enhancing Value
The Woodlands, founded by businessman and land developer George P. Mitchell, is a great example of a community prepared for future population growth and land consumption. The master planning process includes forecasts of households and various land uses the community will add as it expands, thus enhancing the value of present and future developments. Sometimes landowners may have a predetermined value, but educating them and explaining the development process, along with market conditions, often helps them realize their property commands a higher value, particularly in growing and emerging markets.
If you are considering buying or selling land, our team of expert commercial real estate brokers at The J. Beard Real Estate Company can provide the information you need to make a sound decision. Tap into our insight, leadership, and expertise by calling 281-367-2220, or visit our web site at www.jbeardcompany.com to view our current listings.
