During the pandemic real estate boom, big sales on the beachside got most of the limelight, but the party was going on out west, too, where agricultural land values soared.
More than 18,000 acres of field, forest, marsh and grove land changed hands in Indian River County during the past two years – an aggregate area more than twice the size of the City of Vero Beach – according to county property records. Prices rose 100 percent or more in some sections and there were blockbuster deals for as much as $76 million.
That number dwarfs the largest sale on the island during the boom, which was $27 million paid for a house and large lot in the Estate Section.
“Land prices are good,” said Jeff Cusson, a senior advisor with SVN Saunders Ralston Dantzler Real Estate, who has among his current listings the 5,849-acre Corrigan Ranch. “A lot of ag land east of I-95 has doubled in value and is now $40,000 to $50,000 an acre. It is surprising how much that area has gone up.”
“I think ag land prices have all gone up as part of the general rise in the real estate market, and because people are still wanting more space and acreage after covid and commodity prices are strong,” said Indian River County Property Appraiser Wesley Davis, a fourth generation Indian River County farmer. “It is economics 101.”
Generally speaking, land east of I-95 and west of the interstate but close to it along Route 60 is most valuable, while values trail off the further west you go.
Buyers include farmers and ranchers, homebuilders, island residents buying for lifestyle or an investment, people from a range of foreign countries, hedge funds and investment groups and, looming above all other buyers, Florida Power and light, which rancher and AMAC Alex MacWilliam realtor Michael Sexton said he believes is the largest landowner on the treasure coast.
“You have some buyers who just want their own little ranchette to have some space around them and others who need acreage for their business, such as landscapers and nurserymen,” said Cusson. “At the same time, we are seeing more buyers with a global perspective, with a lot of investors and hedge funds purchasing land.”
What is happening here is part of nationwide post-pandemic phenomenon that is generating headlines throughout business and agriculture media. “U.S. farmland escapes real estate slump as prices soar to record,” was a Bloomberg headline in December, while Farmprogress.com reported that, “Hot farmland prices resist interest rate hikes.”
“Rising commodity prices mean farmers made record amounts of money this year, spurring a rush for space to plant in 2023,” according to Bloomberg. “More demand comes just as people fled to the countryside during the pandemic – with non-metropolitan areas growing faster than urban ones – and investors turned to fields as a hedge against inflation.”
The farmland boom is centered in the Midwest corn and soybean belt where productive acres come with strong cash flow as well as price appreciation, making land an attractive way to diversify a portfolio.
As always, though, real estate is local and the situation in Indian River County is different from in Iowa or Ohio.
Here, the demise of citrus, the area’s once great and glorious cash crop, has put the biggest downward pressure on prices, followed by restrictions that come with conservation easements.
“Prices are moderated somewhat in our area by the decline of citrus,” said Cusson, who was president of Becker Groves before going into real estate. “At one time, there was 200,000 acres in groves on the Treasure Coast – in Indian River, St. Lucie and Martin counties – and we are now down to about 25,000 acres. That decline put a lot of supply in the market.”
The decline of citrus, caused mainly by greening, a disease that ruins trees for fruit production, has actually been a double whammy to agricultural land values here. Besides putting much more supply into the supply/demand balance, it has left tens of thousands of acres in Indian River County unproductive, and unproductive land is worth less.
“No clear agricultural land use has emerged to replace citrus,” Cussons said.
Davis said conservation easements also are a break on land values in the extensive parts of the county where they exist.
“When you sell a conservation easement, you still own the land, but you are very restricted in how you can manage it and what you can use it for,” he said. “You can grow hay or run cattle, but you can’t fertilize or add soil or grow other crops.”
That is a problem because the land typically comes with improvement district taxes, levied to maintain roads and canals and pump water off of or onto fields, depending on conditions.
Davis gave an example of a parcel in the St. Johns Improvement District, west of I-95 where the district tax is $150 an acre per year, which makes it hard to raise cattle profitably.
“It is like you are paying that amount as pasture lease and you can’t pay that much and make a profit,” said Davis, whose family once had 600 acres of dairy and citrus land up around the area where the Publix plaza is now at the intersection of route 510 and 512, and who still has a herd of 50 cattle on a 40-acre remnant of the old spread.
“When the land was in citrus, the growers needed the roads and canals and big pumps the districts were created to provide and they were making good money so nobody blinked an eye at $150 an acre, but it is a lot different now,” Davis added.
Although they serve a good purpose in the larger scheme, the sale of a conservation easement essentially sucks much of the value out agricultural land.
Case in point, a 781-acre tract of ag land on Route 60 a couple of miles west of I-95 that is “encumbered by a Wetland Reserve Program Conservation Easement [that] . . . permanently limits drainage and prohibits the construction of any permanent structures on the property.” It is on the market for $1,350,000, which amounts to $1,700 an acre, according to Land.com.
By contrast, a 76-acre piece of pastureland just down the road at 1890 98th Ave. that has development potential is listed for $10,800,000, which translates to $141,000 per acre.
Happily, there are positive market forces here, too – none more powerful than Florida Power and Light’s ongoing buying spree as it continues to build and operate massive solar energy farms along the Treasure Coast, including six in Indian River County.
“FPL has been a significant factor in supporting and even driving land prices,” said Cusson. “They’ve purchased 28,000 acres in the three-county area in the past five years. That is 43 square miles.”
Sexton, who like Davis is an active rancher, working with his father Sean Sexton to manage a herd of 350 cattle on 680 acres of his family’s land, agrees. “All of the solar farms have helped drive up land prices on the Treasure Coast.”
The biggest ag land deal of the past two years took place in April 2022 when SVN Saunders where Cusson works brokered the sale of 10,144 acres that straddle the Indian River and St. Lucie county border to FPL for $76.7 million.
The busy mainland residential home market of the past two years was another factor that pushed ag land prices higher.
“In 2021, it was a strong sellers’ market, with home prices rising rapidly, and raw land went up accordingly, as developers looked for more land to build on,” said Sexton. “It is simple economics.”
And many of the same forces driving the nationwide farmland boom also are in play here.
When inflation is high and you buy land on credit, the amount of money you owe shrinks while the fields become more valuable, and high commodity prices, driven in part by the loss of food crops from Ukraine, also make acreage here attractive as farmers and entrepreneurs try out new crops to replace citrus.
“There was an interesting sale in December, when J &J Produce sold 900 acres on Route 60 with a new packing house on it for $18 million,” said Davis. “The land previously sold for less than $5 million. We haven’t been out to figure the value of the packing house yet, but they are growing row crops, zucchini and bell peppers, things like that, and it is encouraging to see people investing that kind of money in ag land.
“Ag people are smart and the buyers evidently see a profit down the road, and if ag is profitable here, ag will stay here.”
Population pressure is another factor supporting agricultural land prices. Sexton said he just looked up the statistics and found that more than 1,000 people continue to move to Florida each day, needing places to live and food to eat, while the amount of land is finite.
Davis, Cusson and Sexton all said interest rate hikes over the past year have cooled the local ag land market somewhat, but they are optimistic about the future.
Cusson wrote in a report he provided to Veronews.com that “the slowdowns are relative to the extremely fast-paced markets of 2021,” and that “the longer-term outlook on the future of [land values] on the Treasure Coast . . . remains strong.”
“I believe we are at the start of a decade-long trend [of rising farmland prices],” Jim Schultz, who runs a private-equity investment firm with large farmland holdings, told Bloomberg in December.
After seeing land in his portfolio increase in value by as much as 1,600% since it was purchased in the early 1990s, he has no intention of selling dirt. “We sit in a very good position,” he said.
Photos by Joshua Kodis