Land Is Complicated

The Question Everyone Asks

In casual conversations, we’re often asked, “What’s land selling for these days?”

Where to begin…

On the surface, land seems like the simplest real estate product there is. There’s no building. No rent roll. No operating expenses. No deferred maintenance. No tenants to manage.

Just run some comps, slap a price on it, and move on, right?

That assumption is exactly what makes land so difficult to value correctly.

Land Value is Residual

When you zoom out and reframe land for what it actually is, not an empty parcel, but a future development opportunity, the simplicity disappears quickly. Land doesn’t have an intrinsic value in the way an income-producing property does. Its value is residual. It is worth what can be built on it, minus the cost, time, risk, and capital required to get there.

That’s where things get complicated.

Two adjacent parcels that look identical to the untrained eye can have meaningfully different values. Zoning may differ. Development standards may vary. One site may be subject to an overlay district, special stipulations, or infrastructure requirements that don’t apply next door. Access, utilities, off-sites, timing, and political friction all quietly shape value, often in ways that don’t show up on a basic marketing flyer.

How Buyers Think About Existing Assets

To understand why land pricing varies so widely, it is helpful to consider how buyers evaluate existing income-producing assets.

If you’ve ever been in a competitive bid situation on a stabilized property, you know there are countless levers to pull:

• Can I increase rents?

• Can I raise occupancy?

• Can I reduce operating expenses?

• Can I manage more efficiently?

• Can I secure more favorable financing?

• Can I structure equity more creatively?

• Can I accept a lower going-in cap rate?

Each of those levers carries its own web of assumptions and data points. Pulling any single one might slightly alter the valuation. Pulling several at once can swing value dramatically.

Now Remove the Building

Now imagine doing all of that for a project that doesn’t exist yet.

Instead of underwriting real income and real expenses, a developer is underwriting future income, future costs, and future market conditions, often two to three years out, sometimes longer. And they’re doing it without the benefit of certainty.

The Development Layer of Risk

Then layer on an entirely new set of development-specific questions:

• What should the unit mix or floorplates look like?

• What density and design will the market actually support here?

• What will construction cost by the time we’re going vertical?

• What kind of equity terms will capital demand?

• What kind of construction financing will even be available?

Each assumption compounds the next. Miss on a few, and the deal no longer works.

Time Is the Final Variable

And after all of that, after the spreadsheets, sensitivity analyses, and internal debates, there’s one final variable no one fully controls: time.

Markets shift. Interest rates move. Construction costs spike. Capital pulls back. Municipal priorities change. A deal that penciled six months ago may not today.

That uncertainty is why land trades don’t follow neat pricing rules. It’s why two buyers can look at the same site and arrive at vastly different conclusions. And it’s why landowners who rely on surface-level comps often leave money on the table, or price themselves out of the market entirely.

Land isn’t simple. It’s speculative, strategic, and deeply situational.

And that’s exactly why understanding how buyers are thinking matters as much as knowing what sold nearby.

What This Means for Landowners

We spend our days inside these conversations, speaking with developers, investors, and landowners across the region, comparing assumptions, capital constraints, and risk tolerance in real time. Those conversations shape pricing long before a deal ever hits the market.

If you want to understand how those conversations translate to your property specifically—not in theory, not on paper, but in the real market—let’s connect.

Thanks,

John & Ramey