GROWING A NEW ERA OF REAL ESTATE
When you think of real estate, you may think of residential home buying and selling or commercial properties for shopping and dining—the real estate you see as a consumer. But if your roots are in the thriving agriculture sector of Central California, agriculture real estate is a growing hot commodity.
After all, California’s San Joaquin Valley is responsible for an incredible number of crops. It’s the origin of more than half of the fruits, nuts, and vegetables grown in the United States, yet the Central Valley has less than 1 percent of the nation’s farmland. How about them apples!
So, with all of that farmland, and all of that food grown there, what is the value of the land? Is it worth investing in?
Much like other real estate investing opportunities—commercial or residential—farmland is an alternative investment to consider. Farmland investing produces returns with rent yields and appreciation in the land’s value, and acts a lot like dividend stocks, with gains from both income and capital gains. The combination of appreciation and rent yields leads to a consistently strong performance for investors in agriculture real estate. The proof is in the pudding.
According to AcreTrader, an investing platform for land transactions, in the 20 years leading up to 2020, farmland in the United States has produced average returns of over 12 percent. In plain language, you can compare this to the average annual return of 10 percent for the Standard & Poor’s 500 index (S&P 500), the 500 largest publicly traded companies in the United States. The “pudding” here tells us that stocks can be volatile, but in good times and bad times, economically speaking, people still need to eat! Thus, farmland carries its weight in value, with consistent behavior.
One local executive in agriculture real estate is Doug Phillips, who serves as President and Principal of Schuil Ag Real Estate (formerly Schuil & Associates) in Visalia and has decades of insight into the real estate industry. Phillips is the first non-family member executive that Schuil has employed in the business’s history, bringing fresh eyes—but familiar values—to the sector.
“While it’s never guaranteed, some investors believe that investing in farmland and agriculture is recession-proof, even with the stock markets crash,” said Phillips. “Many of our growing list of investors in agriculture real estate find that farmland is a valuable alternative investment that rounds out their portfolio.”
There is a new trend in the ag real estate game: options beyond buying an entire farm. Today, farmland investors are thinking outside the box with options that include agricultural stocks, investment funds, crowdfunding, and REITs (real estate investment trusts). Purchasing ag processing facilities and cold storages throughout the United States has also been proven to be a profitable venture.
“Schuil Ag Real Estate has been the number-one dairy brokerage in the nation for decades,” continued Phillips. “We represent buyers and sellers of nearly every ag commodity in California and the 12 states we are licensed in, and stand proud to have an incredible team of agents with keen skills, knowledge and experience.”
In 2022, the Visalia brokerage oversaw transactions of over 6,024 acres in specialty crops, 8,479 acres in dairy sales, and over 17,329 acres in open land and development property deals across California’s Central Valley. In 2023, the brokerage is positioned for increased volume, aiding clients with selling and purchasing all types of land while navigating the complex process of 1031 tax exchanges.
Above all, as the agriculture real estate game changes, it’s important to pay close attention to trends and new developments if you want to jump in. Buyers and investors from all over the nation will always have their eye on California—a place so many of us call home and a location that is growing a new era of real estate.
Features Contributor Holly Clinard
Photographer Samuel Marshall, Schuil Ag Real Estate
