Land Subdivision
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 4,600 land subdivision firms in the US purchase and prepare property for division into multiple lots and subsequent sale to builders for residential, commercial, or industrial use. They typically develop property that they own, but may also subdivide and prepare sites for other property owners. About 66% of land subdivision firms have no employees. They rely on subcontractors to perform all services in preparing land for development.
Complying with Government Regulation
Land subdivision firms must comply with a wide range of federal, state, and local regulations governing land development.
Local Opposition To Development
Concerns over rampant growth or changes to existing neighborhoods can lead to opposition to new land subdivision projects.
Industry size & Structure
The average land subdivision firm with employees has about 8 workers and generates about $2 million in annual revenue.
- The land subdivision industry consists of 4,600 firms with 38,500 employees and generate about $10.7 billion annually.
- The average single operator (non-employer) firm generates $176,000 in annual revenue.
- Single operator firms rely on subcontractors to perform all services in preparing land for development.
- About 79% of firms with employees have less than 5 employees. Only about 74 firms have over 100 employees.
- The largest states for land subdivision are Texas, California, and Florida.
Industry Forecast
Land Subdivision Industry Growth
Recent Developments
Nov 8, 2024 - Multifamily Developer Confidence Mixed
- Multifamily developers’ confidence was mixed in the third quarter of 2024, according to the National Association of Home Builders (NAHB) latest Multifamily Market Survey. The Multifamily Production Index (MPI) rose two points in Q3 2024 to 40 compared to the third quarter of 2023. The Multifamily Occupancy Index decreased by seven points to 75 over the same period. An MPI or MOI reading of 50 or more indicates that multifamily production or occupancy, respectively, is growing. Multifamily developers’ headwinds include a tight lending environment, higher borrowing costs, regulations, and land availability. The NAHB forecasts that multifamily construction activity will remain weak for about another year amid a significant volume of projects under construction. Multifamily construction is expected to return to more robust growth near the end of 2025.
- New single-family home sales rose 4.1% month-over-month and were up 6.3% year-over-year in September 2024, according to the US Department of Commerce. September’s new home sales marked the strongest pace in nearly a year and a half as buyers took advantage of lower mortgage rates, according to Reuters. Mortgage rates fell in September after the Federal Reserve cut interest rates that month for the first time in four years. Moderating home price growth may also lure buyers; the median new home sales price in September was $426,300, essentially unchanged from a year earlier but up 3.7% over August.
- US multifamily development activity appeared to have hit bottom by the end of Q3 2024, according to property data firm Yardi Matrix. At the close of Q3 2024, multifamily construction starts fell to an estimated annualized rate of 325,000 units, or about 50% below the levels seen in 2023 and 2022. While the Federal Reserve’s interest rate cuts should make it easier to secure financing, long multifamily development lead times will likely prolong the market’s recovery. Yardi Matrix expects multifamily completions to remain high through 2025 and into early 2026 before slowing significantly by mid-2026 and 2027.
- North American construction and engineering spending in 2024 is expected to grow by about 5%, according to FMI’s fourth-quarter 2024 North American Engineering and Construction Outlook. With growth of 29%, public safety will lead 2024 nonresidential building construction, followed by manufacturing (21%), amusement and recreation (10%), transportation (5%), educational (4%), and religious (2%). Commercial construction spending is expected to decline 8% in 2024 amid weaker demand for warehousing space. Lodging construction spending is forecast to drop 6%, and stubbornly high office vacancies will continue to weigh on new office construction, which is projected to see spending rise by 1% in 2024. Despite favorable demographic trends, project delays for some private hospital developments will cap healthcare construction spending growth at 1% in 2024. Amid moderating interest rates, single-family construction spending is forecast to rise 5% in 2024 as new home affordability remains competitive with existing home prices. Multifamily spending is expected to decline by 4% in 2024 amid a recent wave of fresh inventory. The rise in available apartment units has contributed to flat or falling rents in some metros, prompting developers to pause new projects.
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