How Much Is an Acre of Land Really Worth?

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How Much Is an Acre of Land Really Worth?

land for sale sign against trimmed lawn background

Investing in commercial real estate involves much more than simply choosing a piece of land. In order to get the highest value for your investment, it’s important to conduct due diligence on the property you plan to buy and to possess an understanding of the determining factors that contribute to commercial property value.

What’s the Average Cost of One Acre?

The cost of an acre, or 43,560 square feet of land, can vary widely. Land without any structures can have its cost affected by the seemingly insignificant question of whether that land is flat or not. An acre’s proximity to paved roads and utility services and water will also add to or take away from its cost.

The cost to purchase an acre of land can vary widely even from one part of a state to another. That being said, are there any other ways to determine land’s cost? Yes.

Factors That Determine the Value of an Acre

The only real answers as to the property value of an acre can be found in the following determining factors:

Location

Location remains one of the most critical factors that determine its worth. The closer a piece of land is to a highway or major city center, the more value it will possess. The same is true of land in coastal areas as compared to interior acreage.

Zoning and Land Use

The way an acre of land has been designated in terms of zoning and use is another important determining factor. For example, a piece of land may cost more if it has to go through the process of being re-zoned for your desired use.

Supply and Demand

A property’s desirability can drastically increase its value should that property be located near a quickly growing city. Increasing demand, combined with the lower availability of desirable land, can cause the cost of an acre to skyrocket.

Perceived Danger Risk

green field and sky with clouds

Believe it or not, a property value estimate also depends on the risk of danger in terms of weather and other events. Flood and tornado-prone areas, or an acre that’s near a chemical plant, will tend to cost less.

Influx of New Businesses

The arrival of new residents to a city occurs as a result of the arrival of new businesses. This change in economic activity can cause a dramatic increase in land cost. Therefore, an acre of land in these fortuitous circumstances will possess a much higher value.

Desirable Features

A property value assessment of land that’s close to health care and schools will be higher than that of land located in or near an industrial area. The features on the land itself are also a determining factor; the more pleasing an acre is in terms of mature foliage, good drainage, or nice views, the higher its value will be.

With over 20 years of experience, TB-RE offers full-service commercial real estate brokerage solutions that add value and protect your interests. Browse our website to learn more about our services and get in touch.