Business was brisk in sales of historic downtown Frederick office and mixed residential/retail buildings.

Puxatawny Phil was off his game this year.  Despite his promise of an early spring for 2013, it arrived slowly here in Frederick, in fits and starts—much like the economic recovery.

Speaking of the economy recovery…after the first quarter of the dreaded sequestration, we crunched some numbers at MacRo to determine how Frederick’s commercial real estate market weathered the biggest cuts in defense spending in 60 years.

There is good news and bad news…whether the weather is partly sunny or partly cloudy we leave our loyal readers to decide.

The good news is that the number of commercial real estate sales transactions in Frederick during the first quarter of 2013 increased over the same period in 2012 by over 45%.   Buyers and sellers are finally beginning to see eye to eye.

The bad news?  There weren’t any deals over $1 million this past quarter, and the total dollar volume of sales transactions for Q1 2013 dropped to $18.6 million from $31.4 million during Q1 2012.

Overall, the first quarter of 2013 was heavily weighted with sales of historic downtown office and mixed residential/retail buildings—a total of 50% of all Frederick commercial real estate transactions were in this category.

We weren’t surprised, given that we’ve had numerous showings of MacRo properties this quarter to small- and medium-sized business owners looking to expand growing businesses into larger spaces.

Comparing Q1 2013 to Q1 2012, office leasing in Frederick County ticked down slightly on a total square foot basis (a little disappointing), but so did vacancies (which is good news).

Nationwide, office space use and design is experiencing a tectonic shift.  With office demand growing at only half the rate of office-using jobs, and major employers fleeing Maryland for tax-sheltered Virginia, there is some concern within Frederick’s commercial real estate community about the realistic leasing potential of large vacant Class A spaces in this market.

The owners of the former Citibank building at 5280 Corporate Drive have refurbished the lobby, divided the building into smaller spaces for leasing to multiple tenants, and rebranded as Westview Corporate Center.  Will the vacant building in Frederick’s Bechtel campus receive a similar makeover?

The most notable sale of property in Frederick County during the first quarter was the historic Landon House in Urbana.  The property, which included the 6,000 SF mansion and 5.7 acres of land, sold for $850,000 in January.  The mansion had been converted to office space, but the buyers of the property are a group of doctors who plan to convert it into a medical building.

Given the office space conversions taking place in Frederick, we found it interesting that the largest commercial office real estate transaction in the U.S. during the past quarter will also result in a major office makeover.  The Sony Building on Madison Avenue in Manhattan sold for $1.1 billion ($1,290/SF).  The purchaser plans to convert the entire office building into apartments.

The authors: Rocky Mackintosh is President of MacRo, Ltd., a Land and Commercial Real Estate firm based in Frederick, Maryland. He also writes for TheTentacle.com. Kathy Krach is a commercial sales and leasing agent with MacRo.

MacRo, Ltd. is pleased to announce the sale of a Frederick commercial office building known locally as the Key 103 radio station to long-time tenant Manning Broadcasting for $416,000.00.  

Manning intends to continue to operate local Frederick radio stations Key 103 and 106.9 The Eagle on the property.  The property was never listed for sale.

Property Address:  5742 Industry Lane, Frederick, MD 21704

Lot Size:  46,609 Square Feet

Building Area:  3,199 Square Feet

Legal Description: Map 77, Grid 15, Parcel 203

Listing Price: N/A

Sale Price:  $416,000

Zoning:  LI – Light Industrial

Closing Date:  May 1, 2013

Rocky Mackintosh represented the seller in this transaction.  Tom Rozynek of Frederick Land represented the purchaser.

For more information on how MacRo, Ltd. Real Estate Brokerage Services may be able to assist you in the sale or leasing of your commercial or industrial property, contact Rocky Mackintosh at 301-748-5655 or rocky@macroltd.com

MacRo shares a campaign platform wish list from a commercial real estate perspective.

In “Mayor, Mayor, on the Wall, Who’s the Strongest of Them All?” I gave an overview of the candidates for the 2013 City of Frederick mayoral election.  This is the second part of that post.

In follow up, here are the goals I believe the next mayor of Frederick should pursue:

1.  Bring the City of Frederick’s fiscal house to order.

Post-employment benefit and pension obligations: This line item is a tremendous burden on the budgets of municipalities across the country. While the current administration has made adjustments during the past year—by  increasing participant contributions, changing the calculations for retirement age and salary basis, increasing the age of early retirement, and dropping a several hundred thousand into the city’s OPEB and pension funds—it seems to me that there is a lot more work to do to tame this albatross.  This is one Can that can not be kicked any more.

Tax equity between the city and the county: A reasonable effort was made between these two jurisdictions over the issue of the double taxation of city residents and businesses for services provided by the county for the benefit of the city.  While a tax-differential calculation is a good concept, is a $0.04 reduction in property taxes enough to resolve this issue?

Merge city and county services where appropriate: For several years I wondered if there was a cost efficiency to local government if the city were to annex all of Frederick County in under its umbrella, a strategy adopted by many cities throughout the country—Jacksonville, Florida and Indianapolis, Indiana to name two.  But after further review, I realized that creating bigger bureaucracy does not necessarily make for a more efficient government.  That said, the idea of merging the departments of the city and county water and sewer services, among others, could make sense.

2.  Serious pursuit of economic development.

We all know about the plans to complete the next phase of the Carroll Creek Linear Park, and hats off to the current administration for finding the funding to do so, but that alone is a mere fresh coat of paint to what else could be done.

Adjust expectations on hotel/conference center: The city has placed a great focus and expense on laying out guideline to attract a hotel/conference center for downtown.  And while studies that have been produced show how a 200 plus room hotel and 15,000 square foot conference center  will bring tremendous economic benefit to downtown, from the commercial real estate developer perspective none of the studies prove something of that size to be a worthy investment risk.  Lowering the sites on what is feasible now will make sense.

Complete airport runway expansion: According to my calculations, nearly $20 million has been invested in tower construction and property acquisition around the airport … not including the costs associated with the extension of Monocacy Boulevard.  That’s more than a big investment.  But still nothing has been done to complete acquisition of the easements required to lengthen the runways.  Imagine the economic benefit and revenue boost the city will gain from expanding Maryland’s second busiest airport!  This may be a challenge giving that the FAA is facing cuts from sequestration, but still worth pursuing.

Resolve unrealistic land use plans: Back in 2005 (I like to refer to the years around that time as the “Fantasy Years”), the City adopted a masterful novel called the Land Management Code.  Upon reflection and subsequent application (or lack thereof), it has become clear that many parts of that volume established unrealistic expectations that do not work for the new world order.  Consider the residential density formula for vacant downtown parcels … from a multifamily development perspective an increase could be warranted for certain core areas of downtown, which could provide the additional benefit of bringing more workforce housing to Frederick.

Better use of parking meters and decks, and onsite parking requirements: I could and should devote an entire blog post on this issue.  Meager efforts have been made in addressing how to generate enough revenue from meters to be able to finance the parking structure planned behind the headquarters of Frederick County Public Schools.  Imagine the incredible boost in property tax revenues the City of Frederick could realize from expanding development along the Carroll Creek … and the secret lies in two things: density and parking.

Resolve the sewer and water tap fees issue: Water and sewer tap fees are a significant hurdle to new service-sector businesses trying to locate downtown. Every commercial real estate agent in Frederick knows this is a common roadblock the stops prospective tenants and buyers cold. Even restaurateurs with the clout of Bryan Voltaggio struggle to overcome the expenses involved in opening new locations downtown.

3.  Fearless leadership and decision making:

For far too long the proverbial can has been kicked down the road from City Hall.  Much has been said about what has been accomplished; our next leader must be willing to truly address issues head on as the very fragile recovery continues.

At this point, I will give Mayor Randy the benefit of the doubt as a first term elected official, but I do think that he could have taken a stronger position on several of the issues listed above.  I believe that of this year’s crop of declared and would-be candidates all have the ability to lead.  But as the campaign gets more heated and the blood bath begins, let’s hope the strongest and best leader will emerge!

The author: Rocky Mackintosh, President, MacRo, Ltd., a Land and Commercial Real Estate firm based in Frederick, Maryland. He also writes for TheTentacle.com and for Want2Dish.com.

Frederick City’s next mayor needs to bring fiscal order and a commitment to economic development.

 It appears that the dust has settled enough from the 2012 U.S.presidential election.  Maybe not for all; so let’s just say that while most are somewhere between fed up and infuriated with all the inside-the-beltway banter, it is time for many to place focus elsewhere.

For nearly 30% of the residents of Frederick County, it is time to start paying attention to the next political drama that is slowly unfolding as I “put pen to paper” for this blog post…actually to be more precise, I should say “tap fingers to iPad.”

Yes, in less time than it takes for a man and woman to conceive a child and bring it into the world, Frederick City voters will have gone to the polls for the 61st time to cast their ballot for a new Mayor and Board of Aldermen.

The Mayoral race is especially shaping up to be what one current city “alder-person” predicts will be a “blood bath.”

Let us consider the announced candidates and those who may well yet throw their hats—and “hand grenades”—into the ring.

On the republican side, there is current Mayor Randy McClement, who might face immediate past Mayor Jeff Holtzinger, who has told me that he may very well run again.

On the democratic side, the match-up to watch will be that of current Alderman Karen Young (wife of State Senator and former Mayor Ron Young) versus long-time Maryland House of Delegates member Galen Clagett, who is also a former Frederick County commissioner, as well as a local real estate mogul of sorts.

Among the yet-to-be-announced, there are strong indications that former Mayor Jennifer Dougherty may jump in for another run as a third-party candidate.

One of the great things about living is a community the size of Frederick County is that if one lives here long enough, he or she can get to know all the candidates very well.  In my case, I happen to know all well and consider each one a friend.  And since I live outside the boundaries of the city, I will not have to face that difficult behind-the-curtain decision on Election Day.

Be that as it may, as a 40-year member of this community, and someone who is active in the land and commercial real estate business, I do have a few thoughts on the platforms of whoever seeks the throne at City Hall.

There are three primary issues that I will be looking for on the platforms of the Frederick City mayoral candidates:

• serious commitment to—and a plan for—bringing the City of Frederick’s fiscal house to order;
• a no-holds barred commitment to economic development; and
• strong leadership qualities along with the courage and willingness to stop “kicking the can” down the road.

In Part II of this post I’ll dig into these three issues in depth, identifying critical areas that could use some attention from the city’s next administration.

The author: Rocky Mackintosh, President, MacRo, Ltd., a Land and Commercial Real Estate firm based in Frederick, Maryland. He also writes for TheTentacle.com  and for Want2Dish.com.

Manor at Holly Hills could be the last high-end housing development in Frederick. 

Timing is everything.

Just as the first tender green shoots of a housing recovery are appearing, the custom building lots that comprise the Manor at Holly Hills have at long last been recorded in Frederick County.

The art of residential land development in Maryland always requires a hefty dose of patience, but some deals truly stand in a class by themselves.

While my adventures with Manor at Holly Hills have not been as arduous as those of my colleagues finishing the development planned for Lake Linganore, it’s been a long and frustrating road nevertheless–right up to the point of recording the lots.

I will save those details for a later post.

Suffice it to say, it has been a great deal of effort for a community that will consist of just 21 estate lots.  But this jewel of a community, tucked into the rolling countryside of East Frederick, is special.  It may well represent one of the last of its kind in this area for a generation or more.

As with many counties in Maryland, Frederick County has in recent years been caught in a tug-of-war between alternating administrations: those that follow PlanMaryland to the letter and those that would prefer Frederick to have some control over its own destiny from a land planning standpoint.

Plan Maryland puts an emphasis on the super-density communities with public water and sewer on tiny lots, like those seen throughout Montgomery County.  Some have referred to this as a form of social engineering that will ultimately change lifestyles and patterns of living in this county if followed to the letter.

This is a shame, as so many families move here for exactly the kind of wide-open spaces standard of living that rural Frederick County has offered in the past.

It becomes painfully obvious that there is a high demand for communities like Manor at Holly Hills given that MacRo has already received letter of interest on 65% of the lots with a minimum marketing effort.  This project could very well be sold out before the entrance road is complete.

Given the current battle going on between Maryland’s rural counties and Annapolis, it’s highly unlikely Frederick County will see too many more lower-density communities the likes of Manor at Holly Hills.  It’s also becoming harder to find developers who are willing and able to invest up to 7 years to achieve such a small number of lots.

Compounding the complexity and expense of residential development in Frederick are the environmental fees being mandated by the State of Maryland on the 10 counties deemed to be contributing to run-off in the Chesapeake Bay.  Frederick’s share is estimated to be a staggering $1.88 billion over the next five years.

Frederick County commissioners have contemplated going to jail rather than levying the mandatory fees and complying with the state’s interpretation of the vague “tiered” planning requirements mandated by our governor.

How the Smart Growth war will ultimately play out is anyone’s guess.  In the meantime, I’ll watch sadly as a chapter closes on residential development in Frederick County.

But then again, the lots at The Manor at Holly Hills are now recorded (Hooray!), and that creates a wonderful opportunity for a limited number of families to select this beautiful community to build their dream home.

The author: Rocky Mackintosh, President, MacRo, Ltd., a Land and Commercial Real Estate firm based in Frederick, Maryland. He also writes for TheTentacle.com and Want2Dish.com.

A big picture of Frederick County’s commercial market, including the top deals of 2012.

MacRo’s “Top 5 Commercial Real Estate Sales” blog posts are among our most popular with readers.

We decided to do a little something different for the 2012 commercial real estate sales recap.  We love data, statistics, and charts here at MacRo, so we gathered a fairly comprehensive list of the commercial real estate sales recorded in Frederick County for 2012, and sorted them by market segment.

This is an exercise we plan to repeat each January, as a method of tracking trends in Frederick’s commercial real estate market.  In the meantime, what do the numbers reveal in our inaugural year?

Based on the raw data we examined, about $200 million worth of commercial real estate changed hands in Frederick in 2012.

The market sector with the highest number of transactions yielded almost the lowest dollar volume in sales: mixed residential/commercial properties.  There are the small residential-sized mixed-use buildings lining the streets of Frederick City’s historic downtown and the county’s “main street” municipalities such as  the Golden Mile, New Market, Middletown, and Thurmont.

Office and warehouse sales and leasing are the lifeblood of the commercial real estate market here in Frederick, much like everywhere else.

We learned that the Holiday Inn at FSK Mall and the Holiday Inn Express were foreclosed on this past year.  (Were we the last to know about this?)

And of course we ranked the sales to share MacRo’s list of the top 5 commercial real estate sales in Frederick for 2012:

1) $20,910,000            Hilton Garden Inn – 7226 Corporate Court

Hospitality properties were hit very hard by the recession, as evidenced by the foreclosure of Frederick’s own Holiday Inns.  Investors are shedding these properties, and bargain hunters have been snatching them up in anticipation of improved revenues as the economy begins to build some steam.  RAA Management purchased this hotel from LTD Management Company in July.   The hotel is 80,000 SF in size and has 143 rooms ($261.38/SF; $146,244/room).

2) $16,511,000            PNC Bank Building – 110 Thomas Johnson Drive

Greenfield Partners purchased this office building in a portfolio sale worth $161,900,000 from Corporate Office Properties Trust in July.  The building is 122,491 SF in size ($134.79/SF).

3)  $14,642,486           Tranquility at Fredericktown – 6441 Jefferson Pike

Tranquility at Fredericktown was sold twice this past year.  In June of 2012, it was sold to investor/developer Russell Horman for $8,403,079.  He promptly flipped the property in December in a portfolio sale worth $85,100,000 to Capital Health Group.

4)  $9,600,000             Brooklawn Apartments – 1001 Carroll Parkway

Multifamily properties continued to be hot with commercial investors this year, so it’s no surprise that an apartment building made Frederick’s top 5 in 2012. ZOM, Inc., a real estate investment firm in Florida, sold Brooklawn to an investor in Massachusetts in December.  The building is 113,285 SF and has 86 units ($84.74/SF).

5)  $7,150,000             Frederick Brick Works – 184 East South  Street

Frederick Brick Works, Inc. purchased this property in October.  The property consists of a 13,362 SF industrial warehouse building situated on 25 acres of land zoned MU1 ($535.10/SF).

The author: Rocky Mackintosh, President, MacRo, Ltd., a Land and Commercial Real Estate firm based in Frederick, Maryland. He also writes for TheTentacle.com and Want2Dish.com.

Will real estate property taxes rise as Maryland municipalities struggle to shoulder burdens passed along by state and federal government?

The Frederick News Post reported last week that Frederick County commissioners are proposing a merger of fire taxes with property taxes to make up shortfalls in emergency services funding.

The resulting increase in real estate property taxes would not be a terribly substantial one—rates would be bumped in suburban districts by 4.8 cents per $100 of assessed property value.  But it does beg the question: is this just the beginning of a series of incremental increases in property taxes to offset the cutbacks in state and federal funds that Maryland municipalities have long depended on?

With the passing of the Budget Reconciliation and Financing Act of 2012, the State of Maryland made the very controversial decision to shift $710 million worth of the cost of teacher’s pensions to county governments between 2013 and 2016—not an insignificant burden by any means.  (This was in addition to a $260 million income tax increase.)

The pass-the-buck scenario is no doubt replaying all over the U.S. as state governments struggle to meet funding shortfalls during the prolonged economic malaise.  (Maryland was in fact one of only three other states that had not already shifted a share of teacher pension liabilities to local municipalities.)

And there is no help to come from federal coffers.  Democrats and republicans are locked in a mighty struggle to find a nonexistent magic solution to the budget deficit that does NOT appear to involve meaningful spending cuts or burdening the middle class with higher income taxes.

The reality is that whatever solution (no matter how ineffectual) Congress undertakes to resolve the U.S. budget deficit, it is going to be painful, and that pain is going to trickle down to state and local budgets.  Much like Frederick County, local municipalities throughout the U.S. have been belt-tightening for years as the recession ate away at state and local revenues—there isn’t much fat left to cut at the local level.

That leaves revenues to save the day.  The bulk of revenue collected by local governments comes from property taxes—in 2012 real estate property taxes are expected to make up 37% and 55% of total revenue collected by the City of Frederick and Frederick County, respectively.

In turn, the largest expense of Frederick County’s budget is the public school system.

Given that local politicians are no more eager to raise income taxes on the middle class than their peers in Congress, and that the state is in the process of passing school-related expenditures on to the counties, real estate property taxes start to look like a sitting duck.

While it would appear counter-intuitive for local politicians to take any action that risks further depressing the struggling real estate market, the money has to come from somewhere and real estate property taxes are at least still offset by federal tax deductions.  (Although real estate related tax deductions may be on the chopping block as well.)

For some time now, Federal Reserve has been artificially holding down interest rates at jaw-dropping levels in an effort to stimulate the housing market, and at last there are green shoots pointing to a steady recovery in that sector.

If housing does in fact bring some much-needed traction to the U.S. economic “recovery,” it would be logical for local governments to explore property-related taxes and fees as a source of additional revenue that is less likely to get them fired than say, a substantial increase in income taxes.  In the case of Frederick County that controversial leaner look that Blaine Young and is fellow commissioners has forced upon the government the last 24 months, may turn out to be able to absorb these burdens better than most.

In the unlikely event that the housing market really heats up fast, homeowners in Maryland are somewhat insulated from real estate property tax increases on their primary residences.  The Maryland Homestead Tax Credit limits the amount that real estate property taxes can be increased annual due to rising property assessments.  However, the deadline to make application for the credit is Dec. 31 of this year—any homeowner who hasn’t applied by the deadline will lose that buffer and could potentially face higher real estate property taxes.

The Homestead Tax Credit won’t protect property owners in Maryland from an increase in tax rates, however.

So let’s pray that Congress gets smart and finds a way to balance the budget that doesn’t involve treating taxpayers like ATM machines.

All I want for Christmas is a Miracle on Pennsylvania Avenue!

The author: Rocky Mackintosh, President, MacRo, Ltd., a Land and Commercial Real Estate firm based in Frederick, Maryland. He also writes for TheTentacle.com and Want2Dish.com.

Industrial real estate investors in Frederick waited for election results and held out for better properties.

The third quarter of 2012 shaped up exactly as anticipated, with most of the players in the real estate market waiting out the election results. Given how the election played out, most economists don’t expect much in the way of GDP growth in 2013—painfully disappointing, but true.

There were, however, some green shoots in the economy during the past quarter worth mentioning:

• For the first time since the recession began, residential housing actually contributed to GDP during the 3^rd quarter of 2012.
• Industrial production is not what it was before the recession, but at a 3% growth rate it is growing at a stronger rate than the economy overall.

Both of these are good indicators for growth in the industrial real estate segment, although commercial real estate overall won’t recover fully until the U.S. reaches pre-recession employment, which at this rate most likely won’t happen until late 2014 at the earliest.

While there was some cherry picking of prime Frederick industrial properties at bargain prices during the second quarter of 2012, the action in the industrial real estate segment in Frederick County was somewhat sparse during the third quarter.

In terms of sales, one million dollar industrial property sold in Frederick County during the third quarter:

8052 Ball Road: This auto repair and salvage facility near Ijamsville was sold by RSS Enterprise LTD to R.D. Stup for $1,000,000 ($58.82/SF) in August of 2012. Mr. Stup has been the operator of the business for a long time, and the transaction likely represented a buy out of other members of the family.

The Wedgewood industrial business parks were a popular location during the quarter, as two fairly large industrial lease deals closed there:

4600 Wedgewood Boulevard: Kohl Building Products signed a lease for 56,000 square feet ($6.00/SF NNN) in the Wedgewood II industrial complex with a move-in date of January 2013.  Kohl is exchanging their 18,000 sq. ft. space on Urbana Pike for the larger space at Wedgewood.

4510 Buckeystown Pike: GSA took 60,000 sq. ft ($6.50/SF NNN) in the Wedgewood South I industrial complex during the quarter with a move-in date of March 2013. This coincides with  the September vacancy of about the same square footage in that building by RMS Direct, a mail fulfillment business.

How does the rest of 2012 and beyond look for industrial real estate? That depends in large part on retail sales and residential construction. Look for an update on the retail segment of Frederick’s commercial real estate market, as well as a report on recent Frederick-area land sales, in upcoming MacRo Report Blog posts.

Rocky Mackintosh, President, MacRo, Ltd., a Land and Commercial Real Estate firm based in Frederick, Maryland. He is an appointed member of the Frederick County Charter Board. He also writes forTheTentacle.com and Want2Dish.com.

 This current issue of the MacRo Report is being distributed to more than 15,000 residents and others who are interested in Frederick County, Maryland land and commercial real estate news and information.

Two Critical Election Issues

The following MacRo Report entry is written by Rocky Mackintosh, President of MacRo, Ltd. regarding our current local political market

In the midst of a very contentious Presidential campaign, some Frederick County, Maryland voters may be overlooking two significant subjects on the November 6th ballot.

BOARD OF EDUCATION RACE:

This is an important taxpayer issue since nearly 60% of property tax revenue is being entrusted to Frederick County Public Schools each year. Five candidates are seeking three openings on the seven member board. While voters are asked to cast a ballot for three of the five, I can only endorse Colleen Cusimano and Anthony Chmelik. Both of these candidates will bring strong fiscal experience and fresh perspective to improving education for all our students. The other candidates are more representative of the current status quo majority. I feel so strongly that I recommend supporters ONLY VOTE for CUSIMANO and CHMELIK, and leave the third choice blank.

CHARTER GOVERNMENT:

Question A on the ballot will ask voters this simple question: “Do you approve of the adoption of the Charter for Frederick County proposed by the Frederick County Charter Board?” As one who served as a member of the Charter Board, our county has grown and matured to the point that the concept of a five official committee running the government is no longer functional. The adoption of Charter Home Rule will implement an executive form of government and bring much
needed accountability, transparency, stability and efficiency to Frederick County Government. VOTE FOR on QUESTION A.

The Pressure of Pent Up Demand

There is one question that I am constantly asked: “How is the real estate market?” Whether they are actively engaged in real estate ownership or not, everyone wants to know. A healthy real estate market plays a significant role on the strength of our economy and provides revenue for government funding. Over the last five years of difficult economic adjustment, the real estate market has endured, but property has continued to change hands. While economic skepticism looms over the job market, tax policies and national debt, Frederick County has found enough stability to renew optimism in real estate investment.

Consider the excitement around the idea of a downtown hotel and conference center, as well as the growth of Frederick’s residential rental market and medical community … not to mention vacant store-front along Market Street is non-existent.

The MacRo team is engaged in assisting our clients in these and other exciting opportunities. Please let us know how we may be of service to you.

Whether you are looking for retail, office or general commercial space, check out some of our new or current listings or give us a call at 301-698-9696.

Click here to download the complete PDF version of this fall’s MacRo Report!

Fall 2012 Land Market Update

The following MacRo Report entry is written by Dave Wilkinson, Vice President of MacRo, Ltd. regarding the current land market in Frederick, Maryland

Recent data indicates that residential real estate has hit the bottom of its cycle and is improving. My clients are asking how, and when, this will aect the market for land in our region.

Home prices are trending upward while the number of foreclosures are down. September data for Frederick County shows the average home sale price is up 8.5% from the previous year, while the number of active listings is down 29%. While most housing experts are forecasting an extended period of modest price increases, a recent report from Barclays Capital indicated that housing prices could rise between 5% and 7.5% annually through 2015 due to robust demand coupled with constraints in supply.

Typically, land lags behind the residential sector, and the market for land hasn’t been affected by the improving residential market yet. While CoStar reports that 2012 may be the first year since 2005 that the national volume of land sales will be higher than the previous year, buyers are proceeding with caution. Builders and developers require well located properties with low development risk, and all buyers are motivated by low prices.

The market for individual lots in Frederick County is still soft. The number of “buildable” lots sold thus far in 2012 and the median sale price are on target to match the low levels experienced over the past five years. One area of concern is the market for large properties: while four properties over 100 acres sold in 2011, only one has sold in 2012, and the number of active listings has swelled to twenty. Demand from investors and ‘gentleman farmers’ has all but evaporated and ‘full time farmers’ are only willing to purchase at prices that yield a positive return from agricultural activities. Agricultural preservation programs can reduce the cost of acquisition for established farmers, but government funding for these programs is down substantially over the past few years.

Regardless of the economic climate, opportunities always exist for buyers and sellers. Rocky and I have each been in the land business for over 20 years and are well-qualified to assist in the acquisition or disposition of farms, development land and buildable lots.

Please give us a call if we can help you in any way.

Dave is a licensed Realtor and brokers many of MacRo’s real estate building lot listings, using his knowledge of zoning and subdivision regulations, real estate market conditions, and land development options to help MacRo’s clients achieve their goals. Contact Dave at 301-748-5670 or dave@macroltd.com

Click here to download the complete PDF version of this fall’s MacRo Report!