CBRE Launches Land Practice To Cash In On Growing Investment In Agribusiness And Natural Resources Sectors
CBRE Group has stepped up its game in the land, agribusiness and natural resources sectors, launching a new practice in the San Diego office.
The new practice is headed by SVP Matt Marschall, who recently joined CBRE to lead the Western Region in this endeavor, along with his son, Dylan Marschall, a financial analyst in the Capital Markets division, specializing in agribusiness and natural resources.
CBRE San Diego executive managing director John Frager notes both men worked in this area at Cushman & Wakefield and “have a deep understanding of the industry and its market dynamics.” Matt formerly led the land, agribusiness and natural resources advisory group at Cushman & Wakefield, and Dylan was an appraiser for these land types.
Pictured above are Dylan and Matt inside a giant water pipe at the California State Water Infrastructure Project in the Central Valley.
Bisnow caught up with Matt last week (and learned he hails from a third-generation San Diego farm family). We asked him why CBRE is expanding its focus on land and agribusiness and his role. He notes investment in these areas is increasing globally, so CBRE is positioning its Land Group as a leading global advisory, valuation and real estate marketing firm. Matt was brought on board to grow this practice in the Western Region, which includes California, Oregon, Washington state and Hawaii, but will include transactions nationally.
A component of CBRE’s Land Group, this new practice area will focus on land for growing crops and producing natural resources, particularly wind and solar energy, water rights, natural gas, mining and timber. “These sectors all dance together,” Matt says, noting farmers are selling rights to place windmills and solar panels alongside their crops to energy companies, as well as produce electricity for their own uses, such as pumping water for irrigation. “It’s unusual to find a farm or ranch with a single use,” he adds.
Pictured above is the Sunpower Solar Star project on farmland in the Antelope Valley, which will generate enough power to supply 255,000 homes in Los Angeles and Kern counties with electricity. Below is lettuce growing in Huron, CA, in the San Joaquin Valley, or Central Valley, the nation's leading vegetable farming region.
“California is where it’s at for agricultural land,” Matt says. The state is the fifth-largest agricultural economy in the world and is the nation’s largest producer and exporter of farm crops. The state’s major agricultural production areas are
- San Joaquin Valley, or Central Valley, which leads the nation in tree crops, like fruits and nuts, including 95% of the nation’s ripe olives, as well as vegetables;
- Napa Valley, the world leader in wine production;
- Central Coast, known for production of berries, apples, vegetables, cut flowers and mushrooms, as well as wine production in the Santa Ynez Valley; and
- Southern California, which produces subtropical fruits, avocados, dates, vegetables, wine and flowers and other nursery products.
Matt also points out San Diego County has a tremendous number of small farms, and agribusiness represents $5.1B of the region’s economy. It is the 12th-largest farm economy out of 3,000 counties nationally—No. 1 for small farm (10 acres or less) and part-time farmers, as well as production of avocados and nursery products. Encinitas is the flower capital of the world, he says.
Pictured above are avocados growing at Perricone Grove in the Pauma Valley area of San Diego County. Below are orchids growing at Tayama Greenhouses in Encinitas.
As an asset class, the potential for agricultural real estate is huge, he says, noting developing nations throughout the world have growing middle-class populations, and the US is the biggest exporter of farm products to many of these nations.
“As wages increase, families will consume more protein, which requires lots of land for both animal and vegetable production,” Matt adds, pointing out returns on seasonal crops are 11% and 12% on permanent plantings. “So agricultural land is a very excellent long-term investment for a diversified portfolio.”
Pictured above is the Semitropic Water Bank and Infrastructure project in Kern County, CA.
Mark Twain once said, “Whiskey is for drinking and water is for fighting,” Matt says, stressing the need for more investment in water infrastructure. “How to appropriately utilize and conserve water is pivotal to California’s agribusiness.” The San Diego County Metropolitan Water District has done an excellent job of securing water for the region, he says, but as the cost of water increases, the feasibility for building more desalination plants improves.
There is underinvestment in these asset classes, but should be increasing investment in these sectors going forward, he says. During the past few decades, high-quality farmland values have continued to increase 10% annually, and institutional investors, particularly pension funds, like CalPERS, the California Teachers Pension Trust and Gladstone Land Corp, are getting on board, he says.