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 14,200 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 4,500 firms with employees and 8,800 single operator firms that together 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
                            Source: Vertical IQ and Inforum

                            Recent Developments

                            Mar 14, 2024 - Industry Poised for Rebound
                            • The land subdivision industry is expected to return to sales growth in 2024 after a weak 2023 and solid gains in the years after the onset of the pandemic. The industry’s year-over-year sales declined 2% in 2020, then rose 9.6% in 2021 and 4.1% in 2022 before falling -0.9% in 2023, according to Inforum and the Interindustry Economic Research Fund, Inc. Sales in the land subdivision industry are expected to increase by 3.6% in 2024, then grow by about 7% per year in 2025, 2026, and 2027, according to Inforum and the Interindustry Economic Research Fund, Inc.
                            • North American construction and engineering spending in 2024 is expected to grow by about 2%, down from 10% growth in 2023, according to FMI’s first-quarter 2024 North American Engineering and Construction Outlook. Slower spending for residential and some other private sector construction segments will slow overall construction and engineering spending. Construction subsectors that are expected to see double-digit growth in 2024 include manufacturing (up 18% in 2024 over 2023), conservation and development (+13%), public safety (+13%), lodging (+12%), transportation (+12%), power (+11%), sewage and wastewater (+11%), and educational (+10%). Other pockets of steady growth include highway and street, water supply, and healthcare. High interest rates continue to put downward pressure on residential and commercial projects. Single-family construction spending is forecast to drop 5% in 2024 after falling 14% in 2023. Spending for multifamily is expected to decline 15% in 2024 after projects in development peaked at 1 million units in mid-2023. The only nonresidential building construction segments projected to post negative growth in 2024 are commercial (down 4% compared to 2023) and office (-2%).
                            • To cope with housing shortages and a lack of affordability, many municipalities are changing their zoning rules to encourage more housing development, according to NPR. Cities find their zoning rules rigid and outdated, making building new housing stock difficult and expensive. Some cities are changing their rules to allow more multifamily developments, including townhomes and apartments, and permitting accessory dwelling units (ADUs), which add a secondary structure on one lot. Some cities have also reduced lot-size requirements, encouraging greater density and the number of available housing units.
                            • Home sizes increased during the pandemic as families sought more space, and interest rates were near record lows. As interest rates have risen and homes have become less affordable, the trend is reversing, and homes are getting smaller, according to National Association of Home Builders (NAHB) analysis of Census Bureau data. In the fourth quarter of 2023, the median single-family home square footage was 2,156, which is the lowest since 2010. The NAHB suggests that smaller home sizes will likely persist amid continued affordability issues.
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