Advance Land and Timber Blog

What and why is HBU (Higher and Better Use) back in the spotlight?  In 2001, Advance started as a retail operation marketing, tract by tract, 23,000 acres.  This was an unprecedented time, since major institutional timberland holdings were being liquidated into the private sector.  Many of these tracts had not gone through a deed change in over 100 years.  The first time I heard HBU, it was used where traditional timberland was being converted to recreational and residential use.  This term was used frequently and was a basis for increasing value in rural properties until the financial crash of 2008.  Between 2008 and 2010, this market segment virtually disappeared, as with the economy.  It wasn’t until 2014 we started to see the true sense of recreational and residential HBU start its comeback.  Every year we saw this market segment increasing at a gradual pace.  

So let’s now fast forward until March 2020.  Today at Advance we’re experiencing HBU sales that made their peak in 2005 – 2007 seem as a small bump in the road.  There are 4 significant forces that are driving this market.  The first is the significant rise in financial markets, which has fueled 401K’s and retirement funds.  Second is unprecedented significantly low interest rates, much like we’ve never seen before. Third is what we all hope we will have behind us in the very near future, and that is COVID 19.  Many buyers called us during this time of shutdown. Their words were all the same, “My wife and I talked for years about having a small property where we can take our kids to hunt, recreate, and in some cases, build a small cabin, simply to get away.”  COVID 19 brought this to the forefront of many small investor’s attention where families found themselves all working from home, where baseball, soccer, dance, and even a movie was not even an option.  The fourth, unfortunately is disturbing as well, and that is, many people experiencing the civil unrest in much of our major metropolitan areas.  Just as residential housing is setting records every month, many of these buyers don’t want the neighborhood or the HOA, they simply want a small tract of land on which they can build their residence. Virtually every one of these buyers want enough room for their children or grandchildren to escape as well and have room to build on the same parcel. 

This is driving the HBU market.  If you’re ever looking to buy or invest in rural land, the time is now.  On the other hand, if you have that small parcel, and you ever thought about selling, there is no other time like today.  We’ll keep you posted, as we’re setting record numbers at Advance!  

Author: Mark McMillan