Economic Development Organizations Foster Land Deals
By Matt Hudgins |
few CCIMs are finding opportunities to broker land deals by working with
quasi-governmental entities responsible for promoting job creation in their
Just ask James Mascaro, CCIM, eastern region
development director of DP Partners in Harrisburg, Pa. Mascaro’s firm worked
with the Philadelphia Industrial Development Corp. to assemble and acquire a
30-acre site in Philadelphia. In May, DP Partners and its contractors completed
development of a 255,000-square-foot corporate headquarters and distribution
center on the site for Penn Jersey Paper Co.
Penn Jersey distributes paper, chemicals, and
other products to the food services industry. The PIDC wanted to keep Penn
Jersey’s 200-plus jobs in Philadelphia as part of its mission to preserve and
grow the employment base.
“They assembled the land from a number of
small parcels and enabled us to purchase it from them, and then we worked
through the entitlements and approvals,” Mascaro says. “The PIDC was a great
help to us and we were both able to win. They now have 30 acres on the tax roll
that had sat underutilized; now it is going to generate jobs and economic
The PIDC put the infill site together over
the course of several years, but acquired specific tracts to fill out the site
after Mascaro’s company proposed a build-to-suit for its client in early 2010.
Unlike private-sector investors, economic development corporations and similar
organizations needn’t worry about paying property taxes during a multi-year
On the West Coast, Scott J. Fraser, CCIM, has
carved out a niche business by representing port districts in the state of
Washington. A senior vice president in the Portland office of Kidder Mathews, Fraser is the exclusive representative for two such
Port districts are active buyers right now. Last summer, the Port
of Ridgefield acquired 30 acres in its district where planners hope to promote
office development. This year, a large office user is considering a portion of
the site for a build-to-suit office, Fraser says.
At a time when weak economic growth has most investors shying
away from land acquisitions, port authorities and other quasi-governmental
entities have some of the best opportunities they will get to pick up tracts
for future sale or development, Fraser says.
“Those public agencies that have economic
development as their mission, and have the resources to do it, should be taking
advantage of the favorable market conditions,” Fraser contends. “Their
investments, in good markets and bad, have to be in their districts. It’s not
like they can find a better deal across the state.”
In fact, public agencies are among the only active buyers in
Fraser’s markets. He chalks that up to a level of risk tolerance that is rare
today in the private sector.
“Land investment is the riskiest of all the
investments I’ve come across because it is so long-term and so illiquid,”
Fraser says. “Simply dropping the price of land doesn’t assure an owner of a
sale. Whoever acquires the land will have carrying costs, including property
taxes. And they run the risk that somebody might contaminate the property, not
only reducing the value but adding potential remediation liability.”
Well-stocked with what Fraser calls
“patient money,” economic development entities can buy with cash and forgo a
return on their investment for as long as it takes to put a tract to use. “They have a source of capital, and they don’t have the carrying
cost of property taxes that other investors have.”
To learn more about the land
investment market, read "Dirt, Cheap," the cover story in the July/August 2011
issue of CIRE.