Florida timberland values increased last year and are expected to stay strong in 2023, according to the 2022 Lay of the Land Market Report recently released by SVN | Saunders Ralston Dantzler. The annual report summarizes Florida market activity in key land and real estate sectors.
“We experienced a very active market in the timberland segment,” wrote Tony Wallace, senior advisor for Saunders Ralston Dantzler’s timberland forestry group. “Buyers were plentiful, desirable properties came on the market, and quite a few notable deals were transacted.”
Attractive Investment Option
In the report, Wallace outlined several factors driving demand for Florida timberland investments. Many buyers looked to timberland as a way to diversify their holdings, viewing long-term land value as an ideal way to buffer against market volatility in stocks and other investments. Additionally, many investors purchased timber acreage using 1031 exchanges. These investment tools enable investors to channel land sale proceeds directly into a new land investment while deferring capital gains taxes. While most buyers of Florida timberland were from Central and South Florida, Wallace’s reporting found investors from other US states and foreign countries buying into the Sunshine State’s timber market in 2022.
Florida’s 2022 average timber price of $2,474 an acre was nearly double the state’s 2021 timberland sales average of $1,248 an acre, as reported in the 2021 Lay of the Land Market Report. Saunders Ralston Dantzler tracked 11 investment-grade timberland transactions in Florida in 2022, ranging from 1,766 acres to 90,040 acres, with gross sales from $1,227 an acre to $3,313 an acre. Wallace’s team found especially high demand for timber tracts between 500 and 1,000 acres, noting parcels of this size seem to demand a per-acre premium over larger tracts because they are attractive to recreational investors as well as outdoor enthusiasts and wildlife preservationists.
While Saunders Ralston Dantzler anticipates Florida timberland demand to remain strong, several factors may contribute to fluctuations in the market during the year ahead. Wallace pointed to declining housing starts — linked to inflation and rising mortgage rates — as one key factor that may impact overall lumber demand in the coming months. Still, even with this housing lull and some forecasts predicting a possible recession in the coming year, the investment potential for timberland looks robust. “Most land experts and economists have anticipated continued strong demand for investment-grade timberland tracks with $2 billion to $3 billion committed to the timberland asset class that needs to be placed,” Wallace wrote.
About SVN | Saunders Ralston Dantzler
Part of the global SVN network, the team at SVN | Saunders Ralston Dantzler includes 80 land and commercial advisors with offices in Lakeland, Orlando, and Lake City, Florida, and Thomasville, Georgia.