About 40 miles northeast of downtown Austin, a 245-acre rural property just came on the market a little more than a month ago that its broker, Louie Swope of San Antonio-based West and Swope Ranches, thinks is the "next to domino fall."
It's near Jonah: a small unincorporated farming community that is only about 10 miles away from downtown Georgetown, which is the fastest-growing city of its size in the country. It's along State Highway 29 and has been eyed by developers building tens of thousands of homes as far west as Liberty Hill and as far east as Circleville. That makes the site perfect for a home developer to build more than 1,200 homes on 40-foot lots.
At least that's what he's hoping for with the property at 11301 E. State Highway 29, which is owned by Austin-based Lakshmi Land Group LLC and valued at $4.8 million, according to Williamson County property records.
"A lot of these sellers, they've owned property and rural property for a long time – sometimes it's generational-type properties," said Swope, partner and broker at West and Swope. "A lot of them don't need to sell, but once they get surrounded by growth, it's a domino effect. They can sell their farm and ranch and go find another farm and ranch that makes more economical sense where they can still do what they need to do. Most of the sellers don't need to sell, but the timing is starting to make sense for them and their families and their future generations."
This is one example of a market that continues to be hard to gauge. With Austin's rapidly increasing land prices and limited space, shovel-ready sites in the suburbs are in high demand for manufacturers looking for space and for developers that are looking to build housing for those that work there. That's attracted major projects like Samsung Electronics Co. Ltd. and Tesla Inc. to the city's outskirts, along with homebuilding projects in every direction of the metro.
But even with that demand, activity continues to slow. The Texas Real Estate Research Center at Texas A&M University found in its annual rural sales report, which was released in April, that land sales in the Austin-Waco-Hill Country area declined a notable 34% and total acreage sold dropped 41%. That coincides with prices climbing 24% to $7,127 per acre. That ultimately lined up with statewide trends. The slowdown represents a normalization of the market, but there's hope that sales will pick up soon as ever steady demand for sites.
West and Swope Ranch Group, which specializes in marketing and selling ranches from all across Texas, have had a front row seat to a lot of the market changes. Swope said he's seen over the last several years more rural land in the growth paths of Texas' larger urban centers, which is changing a lot of people's sentiments about selling. That's coincided with big market shifts, like during the coronavirus pandemic, when more people were moving to Texas in search of wide open land.
But he said there are signs that things are starting to normalize. Over the last year, many large developers slowed down their buying sprees, but he's expecting now to be a "prime time" for them to pick up inventory — a necessity as the Austin area is expected to continue to grow over the next decade.
"If they hold on in Central Texas, and especially surrounding Austin, the growth isn't going to be slowing down any time soon," Swope said. "I think people understand where the market is going. So I think the markets are going to continue going up and we're where the sellers are in good position to sell the properties that they have."
It's a similar story in other rural parts of the Austin metro. In 2021, an entity tied to Austin-based real estate brokerage and land development firm La Tierra Realty LLC purchased a 173-acre along Farm to Market Road 2001 in Lockhart, just off U.S. Highway 183. While their initial intention was for the property to be residential, they soon after met with city leaders who wanted it to be geared more toward employment.
As a result, they recently sold 53 acres of the property to RealCold, a subsidiary tied to Hudson Yards developer Related Cos. They're turning it into a $65 million, 310,000-square-foot cold storage facility that could employ at least 100 people with hundreds of thousands of additional square footage potentially on the way down the line.
Trevor McManis, broker associate at La Tierra, said they were looking out toward Lockhart after having success with other properties in Buda and Kyle. They have since accumulated hundreds of acres east of Austin, according to property records, after feeling the area was overlooked. Those feelings were further validated when Micron Technology Corp. nearly built a multi-billion dollar facility in their neck of the woods.
"We just had patience and figured that the growth would come, and recognized the value that was there in that area," McManis said. "We bought just knowing that we could do what we wanted, and what we wanted to do would take time and we'd be fine."
The company operates in a distinct dichotomy as both a buyer and seller of land. In terms of selling, what they found over the last several months is an uptick in homebuilders looking for property. But they've also been inundated with interest from industrial and commercial developers. Their aim is to hold on until finding the right fit.
"We don't want to sell someone who's just going to buy it and try and tie it up," McManis said. "We want to sell it to an end user that's going to unlock the most value not only for our property surrounding it but that whole region as a whole."
In terms of acquiring properties, he admitted it's been tough since the pandemic. The run of people, companies and other brokers moving to Austin drove prices up astronomically. He gave an example of several hundred acres they were closing in on that they ended up getting outbid on with a $50 million offer. But he agreed that the market is starting to normalize.
"I think sellers for that kind of stuff are getting tired of their properties sitting for that long with using last year and the past two years pricing," McManis said.
McManis is not sure what's coming next. He's hopeful there will be an uptick in sales, considering the growth that is still happening, the demand for homes and industrial space and the expected lowering of interest rates. He's hoping the market returns to pre-pandemic levels. But said the market won't change their plans in rural areas.
"We're such long-term thinkers. We believe in not only in Central Texas and Austin but this region in Lockhart that is going to grow so much. It might take longer, but the value is there," he said. "We're still buying stuff, we're still selling stuff, we're working on entitling stuff. For us we're never pencils down. But for what I think it's going to happen next year, I don't know."