Issue link: http://winesandvines.uberflip.com/i/80303
VintnersSupply_1-3v_VSC_Dec10.qxd 11/1 MANA GEMENT Bare ground is selling, too I t's not just planted vineyard land that's in demand in Paso Robles. There's also "decent demand for vacant ground" with vineyard potential, says Paso Robles Realtor Ed Steinbeck. "There were two parcels of more than 700 acres each that closed in the first quarter of this year," Steinbeck says. "Both were purchased by corporations with the intent to develop more vineyards." The properties were on the east side of Paso Robles. Steinbeck says smaller properties are also selling. "There has also been some activ- ity in the 60-acre to 160-acre size," he says. "Specifically, four parcels ranging in size from 100 acres to more than 300 acres have sold since the first of the year." These parcels, too, were on the east side. Steinbeck says there hasn't been much activity involving bare ground on the west side. L.D. CALIFORNIA Monterey Paso Pacific Ocean Robles CALIFORNIA RE/MAX San Luis Obispo NV Parkside Real Estate Steinbeck Vineyards Santa Maria W&V: Who else is buying? Steinbeck: We have seen some very large purchases of vacant grape ground this past year. Buyers include two estab- lished local companies as well as some investment groups from the Napa Val- ley and some foreign buyers. We have some investors from Central California currently looking for bargains in the winery category as well as developed vineyard land. W&V: Why are people selling? Steinbeck: Some sellers want to retire. Others were hurt so badly by the frost in early April 2011 that it no longer makes financial sense to hang on. Some are just looking to pull their investment out and move on. There are a wide range of rea- sons, including a foreclosure or two. W&V: When it comes to vineyard sales, are there certain grape varieties that are in greater demand? Steinbeck: Around the first of 2012 it became evident that Cabernet Sauvignon was in short supply, partly due to 2011 weather problems, partly due to increased popularity. Investors and some wineries immediately started looking for estab- lished Cabernet vineyards to purchase. I personally called or visited with more than 20 vineyard owners who had Cab acreage, looking for someone who wanted to sell. Only one seller, to my knowledge, took advantage of the potential for a sale. Others decided instead to bank on the fact that their Cabernet Sauvignon would bring a higher price on the 2012 market, which is exactly what we see happening now. Rhone varietals including Viognier, Grenache, Mourvedre and Petite Sirah are also very popular now. W&V: How long will it take for a vineyard buyer to make a profit on the purchase? Steinbeck: That depends on many variables. Please realize this is based on generalities. Let's assume a raw-land purchase is made for $10,000 per acre (about the going rate for parcels in the 80-acre size.) It will take about $25,000 per acre to develop, considering all improvements such as a well, ripping, irrigation, etc. Once initial development is done, there are yearly maintenance costs that run about $3,500 per acre, including pruning and harvest. The first decent crop can be expected in the fourth year after planting. Let's assume a current sales price for Cab at about $1,500 per ton, and production of about four tons per acre. The simple math says that gross income per acre is $6,000, offset by the yearly maintenance costs of $3,500 per acre, leaving $2,500 per acre to cover carrying costs of financ- ™ A DIVISION OF MOECKLY ENTERPRISES, INC. FILTRATION & SEPARATION Depth Media Sheet Filters Membrane Filters Lenticular Housings Cartridge Filter Housings Cross-flow Filter Systems Recessed Plate & Rotary Drum Vacuum Filters Replacement Press Membrane and Filter Cloths Pumps, valves & fittings VINTNERS SUPPLY COMPANY P.O. Box 153 St. Helena, CA 94574 Toll Free 800.366.6809 Fax 707.584.7955 www.vintnerssupply.com WINES & VINES SEPTEMBER 2012 59