Land developers will benefit from improved lending conditions and real estate values
Los Angeles, California (PRWEB) June 30, 2013
Operators in the Land Development industry are responsible for preparing a site for building construction. Industry-specific activities vary between projects, but commonly include: purchasing land; obtaining regulatory approval for subdivision and development; preparing the site (e.g. surveying and excavating); and installing basic amenities, such as utility connections, roads and sidewalks. Some of the industry's larger companies add value by developing lifestyle amenities for residential communities, such as artificial lakes. “About two-thirds of industry revenue is generated from servicing the residential property market, and the balance comes from servicing commercial, institutional and, to a lesser extent, industrial and nonbuilding property markets,” according to IBISWorld industry analyst Matt MacFarland.
In the five years to 2013, revenue for the Land Development industry is expected to decline at an annualized rate of 2.1% to total $24.5 billion. In 2008 and 2009, the industry struggled through the housing market's most severe downturn since the Great Depression, reflecting the subprime mortgage crisis, the bursting of the real estate bubble and the collapse of credit markets. “Real estate markets began to recover in 2010 and recorded growth in the subsequent years, a trend that helped raise the Land Development industry out of the doldrums,” says MacFarland. Industry revenue is expected to grow significantly in 2013.
This industry has a low level of concentration, as it is mainly comprised of small-to medium-size contractors that operate in specific regional markets. According to the US Census County Business Patterns data and 2013 IBISWorld estimates, less than 1.0% of establishments employ more than 100 people, while more than three-quarters of establishments employ fewer than 10. Many participants operate on a national basis and within other industries, including single-family housing construction, nonresidential building and property development. This diversification allows operators to lower income fluctuations and decrease downturn risks. Additionally, firms are increasingly offering services across several states or metropolitan areas in an attempt to lower downturn risks associated with operating in local markets. Industry concentration is expected to increase over the five years to 2018 as the number of national home-building companies rises and consolidation activity increases due to larger national developers acquiring smaller regional players to diversify and expand revenue.
Aided by improvements in the general economy, industry revenue will continue to grow over the five years to 2018. The industry will benefit from improvements in demand for housing construction, higher levels of lending activity and increases in real estate values. As unoccupied homes are purchased and housing inventories fall during the next five years, demand for industry services will grow as new subdivisions are drawn up in response to rising homebuyer demand for newly built houses.
For more information, visit IBISWorld’s Land Development in the US industry report page.
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IBISWorld industry Report Key Topics
This industry services land (except cemeteries), subdivides properties into lots and develops building lots to sell to builders. Land subdivision precedes building activity. Servicing of land may include excavation work for the installation of roads and utility lines, and operators may subcontract excavation and other activity to specialist contractors. The industry includes large, diversified general contractors that also undertake land development activities.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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