Farmland investment sales activity in the Imperial Valley remained strong in 2018 but far below the deal volume of 2017 and 2016. According to a new report from Cushman & Wakefield, farmland sales in the market fell 28% in 2018 while sales value fell 70%. The shift is a sign of a normalizing market with demand led mostly by smaller local farmers compared to more investment fund activity in 2016 and 2017.

“Investment in farmland has historically been and remains a conservative investment vehicle that generates consistent returns and steady appreciation,” Matt Davis, director at Cushman & Wakefield, tells GlobeSt.com. “Additionally, farmland investments are viewed as an attractive wealth preservation tool for family offices and private equity as well as a good hedge against inflation. An investment group focused on sustainable investing acquired a substantial portfolio in 2016 expanded their holding in 2017. This assemblage skewed the average price per acre value higher in the two years leading up to 2018.”

Local investment activity was the main driver of sales in 2018, leading to smaller deal sizes as a result. In 2018, there was only one deal priced above $2 million dollars compared to 14 in 2017. “The market is not as frequent a target of institutional investors as other California farm regions, though several do have a presence in the Imperial Valley,” Curtis Buono, managing director at Cushman & Wakefield, tells GlobeSt.com. “Investment fund purchases are sporadic and having one or more large investment sales in any given year is fairly uncommon. So 2018 really just saw typical market participant activity rather than being representative of any marked decrease in fund activity. The 2018 sales were generally farmer-to-farmer and consisted mostly of smaller farms at lower price points than you would see funds be involved with.”

While sales values have been decreasing, large investment sales skewed the numbers. Now, the market is returning to a historical average. “Generally, in markets like the Imperial Valley where soils productivity can vary greatly, farmland tends to trade in price tiers,” adds Buono. “Today, we would expect an overall average price per acre in the $8,500 to $10,500 range depending on what sold that year, so 2018's price per acre, though lower than the skewed 2016 and 2017 figures, does support a generally stable market where the average has remained in the typical range.”

In 2019, the market appeared to pick up speed, and it could mean a healthy year for farmland activity. “In quarter one, transaction activity equated to over 57% of the value transacted and almost 50% of the acres sold during all of 2018,” he says. “Given this strong start, we anticipate 2019 will be as strong year for agricultural sales in the market.”

Instant Insights /

Local Farmers Fuel Strong Farmland Activity in Imperial Valley

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