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back March 28th 2023 back

There’s plenty of land for development available nationwide, but it’s not cheap and hardly easy to acquire, zone, and develop.

According to a recent report from Commercial Café, cities across the Texas Triangle have tens of thousands of acres of undeveloped land while densely built-up areas such as New York City still have plenty of land for development.

Alternatively, Charlotte and San Francisco have less than 1,000 acres of undeveloped land between them.

Across the 20 most populous cities in the US, there are 516,980 acres of land currently still awaiting development – with the average lot size resting at roughly 1.22 acres.

Available land in Dallas and Fort Worth is plentiful. Big D led the states with 90,739 acres across more than 30,000 parcels with an average size of 2.72 acres. Dallas often leads when it comes to residential development.

Fort Worth has 74,835 acres of undeveloped land with average lot sizes around the 2.66-acre mark. The city’s pipeline tilts heavily toward industrial development.

Phoenix (53,022 acres) was next, followed by Oklahoma City and San Jose.

‘What Will It Be Used For?’

Key to the conversation when acquiring it is what the land will be used for, whether has it been zoned, and whether developers receive incentives, according to James Nelson, principal and head of investment sales for the New York Tri-State area for Avison Young.

“You have cities such as Houston that might be the most development-friendly in the country,” Nelson said. It’s not like that everywhere.

He also said developers must consider if the available area is true “dirt” or a vacant office building, and what they would do with that office building.

Zoning Change Is Difficult, Time-Consuming, Expensive

Adam Haefner, Principal, Industrial Landlord Representation Tenant Representation Logistics, said there is land available in Chicago, but it is difficult to assemble enough to build an industrial building of size.

“If a zoning change is required, it is difficult, time-consuming, and expensive to work through the process,” Haefner said.

“At the peak of the market, we were seeing prices approach $30 per land foot. Based on the increases in interest rates, we would estimate land prices should be down by around 30 percent.”

Haefner said he expects land acquisitions and construction starts to slow for the rest of the year until the debt, equity, and capital markets stabilize.

“Right now, even if you can get the debt and equity, it is extremely difficult to predict where a project can be sold on the capital markets when it is completed and leased,” he said.

Developing Rural Land Involves a ‘Lengthy Process’

Noah Breakstone, CEO of BTI Partners, tells GlobeSt.com that although Jacksonville’s real estate market may have ample land available, the readiness of such land for home construction is not assured.

“Developing rural land often involves a lengthy process of obtaining entitlements, permits, and constructing necessary infrastructure, which can take between two and four years,” Breakstone said.

“This extended timeline can pose a challenge for many homebuilders who are unable to hold such inventory for future development, which can be viewed as a liability.”

BTI Partners is in essence a land inventory solution provider to national and regional homebuilders by acquiring, permitting, and developing large tracts of land to meet their just-in-time land needs, Breakstone said.

“Case in point, we recently acquired 4,500 acres of rural land in the Jacksonville market,” he said. “We will develop the master infrastructure for the site, making it suitable for vertical construction within the next few years, and then convey super pads to homebuilders who require immediate, ready-to-build sites.

“As the population grows and demand for more affordable housing increases, it is essential to have ready-to-build land to meet this demand.”

Big Difference in Arizona, Texas Land

Anita Verma-Lallian, founder and Arizona Land Consulting, tells GlobeSt.com that the difference between Arizona and Texas cities is that 17% of Arizona is private land, and the rest is owned by the federal government, the state, or Native American reservation. Texas, on the other hand, is 93% private.

“There is still plenty of available land in Phoenix, though that supply is diminishing quickly,” she said. “Prices for land with improvements and infrastructure tend to be much higher than land that needs improvements to be made in the future.”

A Surge in Austin

Land prices in many markets, including areas such as Austin, and for developers looking to expand their build-to-rent portfolios, have seen quite the surge.

Northmarq’s Scott Lamontagne, managing director, investment sales, said he recently announced via email a “Coming Soon” blast for land that within 48 hours had five bids that were roughly $500,000 above the list price.

“It didn’t have any other info other than ‘Coming Soon,’ he said, speaking on a panel at IMN’s Build-to-Rent East Conference in Nashville this month.