Commonwealth Land’s annual forum looks at major trends
Developers and professionals in real estate should be on the lookout for two trends expected to result from legislation passed by the 2013 General Assembly; namely the transfer of rural development rights and what is known as “hands-on rezoning.”
Will Homiller, an attorney who focuses on commercial real estate for the Richmond office of Troutman Sanders LLP, explained the trends during the fourth annual Virginia Land Forum Tuesday sponsored by Commonwealth Land, a division of Commonwealth Commercial Partners in Richmond. The forum, held at the Westin Hotel on West Broad Street, attracted more than 200 people involved with commercial real estate.
The forum’s theme was Virginia Real Estate in Transition. Homiller, one of the speakers, pointed out that 57 bills passed during the 2013 session of the Virginia General Assembly could have an impact on decision making by professionals in regards to commercial real estate investments.
“Two main trends are the transfer of development rights from rural property to more traditional urban/suburban areas and a hands-on zoning approach by localities that requires more specificity on what’s brought to the table with rezoning,” he said.
So far, Frederick County in Virginia is the only county that has a transfer of development rights program in place, Homiller said. In a nutshell, the program allows owners of rural land, such as farmers, to transfer residential density rights from their land by selling them. This approach allows the farmer to obtain money while still being able to own and farm the land. It benefits developers by allowing them to buy additional residential density rights from rural areas and transfer them to proposed areas within the community, increasing increase density without having to go through a rezoning.
“It’s in the infancy stage now. It could be the direction that Virginia is heading and the nation is heading to provide economic development incentives for open space,” Homiller said.
The other trend, hands-on rezoning, refers to the more rigorous review and requirements many counties are using during rezoning applications. “Make sure about the timing of your development and be aware that they will be asking for more specificity,” Homiller said.
The forum’s moderator, Sidney Gunst, the force behind the 1979 development of Inns- brook Corporate Center in Henrico County, lamented that today’s trends are “ruining our ability to innovate and think.”
Another speaker, Michael Joyce, the president of financial planning firm of JoycePayne Partners in Richmond, had good news about commercial real estate as an investment asset. While the S&P 500 has been the top performing asset over the last 10 years, a lot of that is due to recent performance, he noted. The apartment sector and real estate investment trusts have been strong performing assets in recent years, he said.
Also, home values represent about 25 percent of a household’s net worth, he said. While this figure is down from the middle of the last decade, “it still represents a substantial amount.”
Meanwhile, Bill Barnett, a managing partner with Commonwealth Land, also brought good news. He said the value of 100 plus acres of land in a rural county in Virginia is up by about 4 percent, compared to 2012. This year that amount of land is selling at about $2,500 an acre, higher than the $1,100 an acre in 1999, when Commonwealth first began tracking the information, but not as high as the $3,000 an acre such land brought before the Great Recession.
“It’s not a bounce or a boom but it is steadily realized growth,” Barnett said. “If you take away one component from this conference, I would suggest to you that the game is different today … There’s a lot more information, analytics, a lot more skill sets and resources that are available.” Land sales, he added, are “a team sport. Each property has its own unique cycle.”