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 14,600 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 7 workers and generates almost $2 million in annual revenue.
- The land subdivision industry consists of 4,800 firms with employees and 9,700 single operator firms. Together, they generate about $10.7 billion annually.
- The average single operator (non-employer) firm generates $171,000 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
Mar 16, 2023 - Home Builder Sentiment Improves
- Tight existing home inventories are pushing buyers into the new home market, which helped move home builder confidence higher in March, according to the National Association of Home Builders (NAHB). Home builder sentiment, as measured by the NAHB/Wells Fargo Housing Market Index (HMI), rose two points to 44 in March 2022 2022, although the HMI remained in bearish territory. Any HMI reading over 50 indicates more builders see conditions as good than poor. While stress in the US financial system pushed mortgage interest rates down, affordability is still a significant roadblock to homeownership for many. The NAHB said a side effect of the increased pressure on regional banks will be a further tightening of acquisition, development, and construction (AD&C) loans for home builders. In March’s HMI survey, 40% of builders rated lot availability as poor.
- Mortgage rates dipped slightly after the collapse of Silicon Valley Bank, but housing industry watchers are uncertain if lower rates will persist long enough to provide much relief from the affordability issues that have slowed the US housing market, according to Yahoo Finance. Some financial market watchers note that the banking sector's jitters could slow the Federal Reserve’s strategy of taming inflation with rate hikes. Redfin chief economist Daryl Fairweather told Yahoo Finance, “There's still a lot of uncertainty but in the near term, I do expect mortgage rates to drop. And I expect buyers to take advantage of those mortgage rates because we've seen buyers be incredibly sensitive to those interest rates.” However, some industry insiders suggest that rates would need to drop and stay low for a sustained period to lure more buyers into the market.
- Multifamily developer confidence improved in the fourth quarter of 2022 but remained in negative territory, according to February’s Multifamily Market Survey (MMS) report by the National Association of Home Builders (NAHB). The Multifamily Production Index (MPI) rose two percentage points in Q4 to 34 compared to the third quarter of 2022. The Multifamily Occupancy Index increased by four points to 49 over the same period. An MPI or MOI reading of 50 or more indicates that multifamily production or occupancy, respectively, is growing. While multifamily housing demand is robust, supply is catching up with demand in some markets. The NAHB expects multifamily production will slow significantly over the next two years after rapid growth in 2022. Developers face several challenges, including high regulatory costs, difficulty securing new project financing, and high interest rates.
- Nonresidential construction firms’ backlogs increased in February, according to the Associated Builders and Contractors (ABC). The ABC’s Construction Backlog Indicator rose to 9.2 months in February, up from 9 months in January. Backlogs were also up year over year compared to February 2022’s 8.0 months. February’s backlog gains were led by the heavy industrial segment, which saw its backlog rise to 10.4 months from 8.4 in January. The infrastructure segment’s backlog grew from 8.6 months in January to 10 months in February. The commercial and industrial backlog rose from 9.2 months to 9.4 months over the same period. Amid more robust backlog growth, ABC’s Construction Confidence Index for sales climbed to 61.2 in February over January’s reading of 60.7. A Confidence Index sales reading of 50 or more indicates that most contractors are optimistic about sales.
Get A Demo
Vertical IQ’s Industry Intelligence Platform
See for yourself why over 60,000 users trust Vertical IQ for their industry research and call preparation needs. Our easy-to-digest industry insights save call preparation time and help differentiate you from the competition.
Build valuable, lasting relationships by having smarter conversations -
check out Vertical IQ today.