Market Perspective

Is the Appropriate Color of Solar – Green or Yellow? Wk 3

Posted by on Nov 16, 2017 in Ned Massie, Perspective | 0 comments

Question Number 2: Who bears the cost of demolishing and removing the solar panels and related structures 30 years from now when they are out of date and no longer working? It is our understanding from talking with experts in the field that solar panels lose a little bit of efficiency every year. Therefore, at the end of 30 years they are highly inefficient and basically rubbish. But the cost of demolishing and hauling them away to a dump could be quite substantial. It might make the lease payments received by the landowner look insignificant. What has been represented to me as the cost per acre to build a solar farm is astronomical. In our conversations with one representative of a solar farm development company that was only interested in leasing land, we asked at the end of the 30-year lease who paid to remove all the solar panels and improvements that would now be worn out. The company representative answered that that would be the cost of the land owner. So be careful if you are talking about leasing your land to a solar farm developer. Understand who is paying for the demolition cost at the end of the lease, and the magnitude of the cost if you are responsible as a land owner. Be especially careful evaluating the future financial ability of that company to perform their obligations. It is critical to remember that land is the source of all wealth. Every product that we humans consume originates with land. Not all tracts of land are equal in quality and portfolio management requires every investor to hold some cash for liquidity. But historically, long term the best investment is...

read more

Is the Appropriate Color of Solar – Green or Yellow? Week 2

Posted by on Nov 9, 2017 in Ned Massie, Perspective | 0 comments

Question Number 1: What is the financial strength of the company that wants to develop a solar farm on your land? This is critical information if you are entertaining leasing your land to a solar farm company. It is just as important if you are anticipating selling your land to the company. In both cases, they are operating in a subsidized market and those subsidies could be withdrawn abruptly leaving anyone involved that has not gotten all the way through the process in jeopardy. If you are considering leasing your land to a solar company, please keep in mind that the economic landscape is full of big companies that went bankrupt. “Enron” should make your knees quiver. So, before you go very far with a company that has approached you about developing a solar farm on your land, ask for a copy of their balance sheet and their income statement. Verify their financial ability to perform on their promises in all circumstances. It is critical to remember that land is the source of all wealth. Every product that we humans consume originates with land. Not all tracts of land are equal in quality and portfolio management requires every investor to hold some cash for liquidity. But historically, long term the best investment is...

read more

Is the Appropriate Color of Solar – Green or Yellow? Week 1

Posted by on Nov 2, 2017 in Ned Massie, Perspective | 0 comments

Introduction: A significant force currently impacting the land market in Virginia is the emphasis on “solar farms”. I find “solar farm” to be an interesting nomenclature for an industrial use of farmland. The solar farm industry exists because it is heavily subsidized by us taxpayers. Like any market that is being driven by government subsidies, this market is totally distorted and a lot of characters are participating in it. The reluctance of many American electricity generating companies to be involved in solar is a reflection of the fact that in Virginia we have a significant number of cloudy days. Every electrical power company has to generate electricity so their customers can flick a switch at any time and enjoy the benefit of electricity whether the sun is shining or the sky is overcast. Therefore, solar electricity is more expensive not only to produce but also because of the cost of the redundancy of generating electricity conventionally. The country that has invested the most in solar energy is Germany. Every article I have read about the impact of solar energy on Germany’s economy references the significantly higher cost Germans pay for electricity than consumers in other countries with less emphasis on solar. Landowners approached by companies or individuals representing companies who want to do “solar farms” on their property need to be cautious. We have identified four critical questions that you should ask in the event you are approached to have your property used as a “solar farm”. Those questions will be the next four blogs. It is critical to remember that land is the source of all wealth. Every product that we humans consume originates with land. Not all tracts of land are equal in quality and portfolio management requires every investor to hold some cash for liquidity. But historically, long term the best investment is land....

read more

The Race Continues: Economic Growth vs. An Economic Tantrum-Week 21

Posted by on Oct 25, 2017 in Ned Massie, Perspective | 0 comments

Land Market Summary by Segment: Office Land: It has been at least ten years since I have had an inquiry from a potential client seeking a general office site. Almost all of the Class A office space that has been built over the last few years has been for medical use. Most of the medical office space demand has been driven by the consolidation of the medical industry under Obamacare. In a recent conversation with a land developer, he shared with me that he was talking with several Class A general office building developers about sites in his business park. Then he paused, and said, “Of course I have been talking to the same developers about the same buildings for the last six years.” I think that captures the relative lack of demand for general office land. In these uncertain times, it is critical to remember that land is the source of all wealth. Every product that we humans consume originates with land. Not all tracts of land are equal in quality and portfolio management requires every investor to hold some cash for liquidity. But historically, long term the best investment is...

read more

The Race Continues: Economic Growth vs. An Economic Tantrum – Week 20

Posted by on Oct 18, 2017 in Ned Massie, Perspective | 0 comments

Land Market Summary by Segment: Industrial Land: The industrial land market for the last six years has been dominated by the “Whales”. Whales look for sites of approximately 150 acres on which they can build a 1.5M square foot distribution center. Not all of them are for Amazon. There are other industries and companies that are doing similar development because of the efficiencies they gain and the capacity they can build using computerized tracking systems, etc. The mid-sized deals that we hear about are in the 300,000 to 500,000 square foot range. Recently there have been fewer of those. The local entrepreneurs and contractors are looking for sites for even smaller facilities and having a difficult time justifying the payment they would have to make because of the cost of construction. Rents have not risen enough to pay for the construction of smaller facilities. Hence, industrial land values are somewhat depressed because the Whales demand very inexpensive sites. And the small users that would typically pay a higher price per acre are having a hard time justifying the monthly payment they would have to make even at the current historically low interest rates. In these uncertain times, it is critical to remember that land is the source of all wealth. Every product that we humans consume originates with land. Not all tracts of land are equal in quality and portfolio management requires every investor to hold some cash for liquidity. But historically, long term the best investment is...

read more

The Race Continues: Economic Growth vs. An Economic Tantrum-Week 19

Posted by on Oct 12, 2017 in Ned Massie, Perspective | 0 comments

Land Market Summary by Segment: Retail Land: In the economic history of the world we have never seen a company like Amazon. Its’ tentacles seem to reach everywhere on a global basis. The closest we can come in history is the “company stores” and the vertically integrated companies that existed in the early 1900’s. That concentration of power in one company or a few hands led to the “Trust Busters” populist movement in the late 1800’s and 1900’s. They gave us President Teddy Roosevelt. Economic vitality was enhanced. I don’t know if history will repeat itself. While I can see the benefits to the American consumer of Amazon, I worry about it becoming too great a concentration of power in one company. Monopolies maximize profit via high prices. It is obvious that Amazon is having a huge negative impact on some segments of retail, causing the closing of stores and creating unemployment. That will have an impact on the value of retail land… in some market segments. Currently, we continue to see a demand for individual retail sites in higher income areas, but price sensitivity is occurring. Moderate and lower income areas have almost no demand for sites. In these uncertain times, it is critical to remember that land is the source of all wealth. Every product that we humans consume originates with land. Not all tracts of land are equal in quality and portfolio management requires every investor to hold some cash for liquidity. But historically, long term the best investment is...

read more