Lot Lines, Demand for Land (complete article from source)
Source: journalrecord.com, by Darren Currin
June 05, 2009
Changes in market conditions, coupled with frozen credit markets, have made it increasingly difficult for investors to acquire commercial buildings in Oklahoma City in recent months. As a result, some investors have gone back to the basics of commercial real estate as they now are seeking the most basic form of commercial property – raw land.
Land always has been a popular choice for commercial real estate investors, largely due to the fact that the city has such an abundance of it. Whereas land is becoming a dwindling resource in most large cities, it remains abundantly available no matter the location in the metro area, from the central core to the suburbs.
The demand for land can be seen by the large amount of transactions happening in the metro area since the beginning of the year. According to a recent search conducted on Xceligent, the metro area has seen approximately 95 parcels of land change hands thus far in 2009, which is far more sales than other commercial property types.
There are several reasons why land acquisitions are so active in Oklahoma City. The most notable is low cost. Even though land values have soared to record levels in high-traffic areas like Memorial Road, Bricktown and parts of Edmond, land still remains one of the most affordable forms of real estate. Furthermore, there are several undeveloped areas of the metro where land can be bought inexpensively.
As a result of land's affordability, it is easier for investors to acquire without financing, or in cases where financing is needed, it is easier most times to secure than when buying a commercial building.
Another reason for land's popularity is the relatively low cost required to maintain it. When compared to commercial buildings, property taxes for land are a fraction of the cost. Also, the cost to maintain land is incredibly low and in some cases nonexistent except for taxes.
Finally, history has shown that land rarely loses value. While values appreciate faster in high-growth areas, investors still can make money in modest-to slower-growth areas if they have the patience to hold on to their investment for an extended amount of time.
The big questions currently among land investors are where the next hot growth areas of Oklahoma City will be of where land values will escalate to the heights that are being seen in the areas such as Memorial Road. The person who has the answer will become and instant millionaire.
Some of the common speculation points to areas such as the far west corridor of Northwest Expressway, along the Kilpatrick Turnpike extension, east of Midwest City on Interstate 40, portions of east Edmond and far north as Interstate 35 in Edmond. Only time will tell if these speculations will pan out.
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