Is New York Land a Good Investment?

With over 7 million total acres of land area blanketing the Empire State yet median prices for vacant property sales recently averaging a lofty $230,000 statewide according to industry analyst reporting, deciding prudent investment allocations into New York’s immense yet highly fragmented land market requires parsing metrics beyond simply total supply abundance. Hyper-localized zoning shifts, economic development around transit expansion and other metro factors pressuring housing demand disproportionately support pricing lift-offs around NYC, Long Island and select upstate cities that skew statewide land value averages to levels misaligning with rural realities. 

For example, industrial development parcels in Bronx County trade owners at over $900,000 per acre as builders bid aggressively to wedge projects into America’s most notoriously dense borough. Yet just 90 miles north, Sullivan County 50-acre recreational tracts with lake frontage change hands around $3,000 per acre catering to weekend respite seekers. Evaluating risk-return profiles recognizing New York’s property ladder contains many disjointed rungs remains pivotal before land speculators and commercial developers invest capital into spaces supported more by picturesque scenery than urban progression currently.

Overview of the New York Real Estate Market

New York state consists of very distinct real estate markets. New York City dominates when it comes to population, economic power, and fame, but upstate New York should not be overlooked. Here is a quick overview of the major markets:

• New York City - The world-famous Big Apple is home to 8.5 million residents across 5 boroughs. The city anchors the massive Tri-State metro area encompassing parts of New Jersey and Connecticut. New York City real estate is renowned for its sky-high prices and cutthroat competition. Land suitable for development is extremely scarce.
• Long Island - Home to nearly 8 million residents, Long Island benefits from proximity to NYC but also has its own economic engines. Cost of living is high, especially in Nassau County and northwestern Suffolk County. The Island has a mix of high-density neighborhoods and more suburban communities.
• Albany - As the state capital and home to over 1 million residents, the Albany metro area is an important center of government, education, technology, and healthcare. Albany offers relatively affordable real estate compared to downstate.
• Buffalo - Once a major manufacturing hub, Buffalo has transformed into a service-oriented economy anchored by education, healthcare, and tourism. The metro area has just under 1 million residents. Housing costs are well below the state average.
• Upstate Cities - New York has several mid-sized metro areas like Rochester, Syracuse, Utica, and Binghamton. These cities offer diverse economies and universities while real estate remains fairly affordable.
• Upstate Rural - Outside of the cities, upstate New York is dotted with small towns surrounded by forests, farms, lakes, and rivers. Property taxes tend to be high but land prices are attractive.

Why Invest in New York Land? The Pros

There are good reasons why investing in vacant land or agricultural land in New York makes sense. Here are some of the key advantages:

Strong, Diverse Economy

New York has a GDP over $1.7 trillion, trailing only California and Texas. The economy features strengths in finance, real estate, professional services, tech, healthcare, education, manufacturing, tourism, and more. This diverse mix provides stability and drives demand for housing and commercial real estate.

Increasing Population

After decades of decline, New York City’s population is growing again, driven by domestic and foreign immigration. The city could hit 9 million residents by 2040. Upstate metro areas like Albany, Buffalo, and Rochester have also posted modest population gains as people priced out of larger cities relocate. More residents means more housing needed.

High Property Values

Thanks to high demand and limited space, property values in cities like NYC are among the highest in the world. Even upstate, values in markets like Albany and Buffalo have been rising. Vacant land purchased for a good price today could yield strong returns down the road.

Proximity to Major Markets

Even rural upstate NY land is within driving distance of large metro areas full of potential buyers. Albany, Syracuse, Rochester, Binghamton, NYC, Boston, Montreal, and Toronto are all within reach. If development potential arises, there is a sizable customer base.

Tourism Destination

From the beaches of Long Island and the Hamptons to the mountain vistas upstate, New York attracts over 200 million visitors per year. Tourism makes the state ideal for recreational land investment. Vacation rentals, glamping, RV parks, and other hospitality businesses can thrive.

Cleaner Image than the Past

New York has shed past reputations for crime, pollution, and urban decay. Major cities have undergone revitalization. Marketing land and developments in New York is easier thanks to its improved image. This expands the pool of interested investors and homebuyers.

Business-Friendly Climate

New York works hard to attract new business investment through incentives like tax credits/abatements, grants, and subsidies. Startups in high tech, life sciences, renewable energy, and manufacturing can benefit. The pro-business environment makes commercial real estate development more feasible.

Factors to Consider Before Investing in New York Land

However, it is not all upside when it comes to vacant land investing in New York. There are number of issues to research beforehand:

Strict Regulations

New York’s rules regarding land use, zoning, building codes, and the environment are notoriously strict. Getting approvals for development can be difficult, costly, and time-consuming. Working with local zoning boards requires patience and diplomacy.

High Property Taxes

The property tax rate in New York is among the country's highest. While land itself may not be taxed too harshly, taxes escalate once structures are built. This can squeeze profit margins on rentals or developments. Upstate has lower rates than downstate but taxes are still substantial.

Extreme Weather

From blizzards to hurricanes, New York sees more than its fair share of extreme weather. Flooding is a particular concern upstate near Lake Ontario and the St. Lawrence River. Climate change may exacerbate issues. Make sure any land purchased is suited for the local conditions.

Brownfields Rehabilitation

Much of the vacant land in upstate cities and rural areas is former industrial or commercial property. Extensive remediation of pollutants may be needed before buildings can be occupied or ground broken. This adds extra costs to development.

State Debt Situation

While New York remains prosperous, its debt situation is troubling, owing over $98 billion as of 2022. If the state’s finances worsen, raising taxes could be an appealing option for officials. This may impact returns for landowners and developers.

Upstate Population Loss

Though upstate metro populations have stabilized, many rural counties continue to lose residents. This shrinks the potential market for housing and commercial property. Carefully research the demographics around any land for sale upstate before buying.

Downstate Scarcity

In NYC, Long Island, and the lower Hudson Valley, developable vacant land is vanishingly rare. What little exists sells for a premium. Be prepared to pay top dollar or look farther upstate and elsewhere for cheaper options. Competition is fierce for parcels.

Health of NYC Real Estate

NYC real estate has rebounded from a slump during COVID but still faces headwinds like rising mortgage rates, inflation, recession fears, and a stock market decline hurting wealthy foreign buyers. Keep a close eye on the Manhattan and luxury property markets.

Evaluating Different Types of New York Land for Investment

Investing in land across New York means weighing pros and cons across distinct markets and land uses:

Raw, Undeveloped Land

This vacant land often lacks access or utilities but provides a blank slate for eventual development. Taxes are minimal but so is short term income potential. Strict zoning, approvals, and development costs are challenges. Upside comes from long term price appreciation if population and property values rise.

Raw land with lake, river, or mountain views boosts value for future recreational properties. Proximity to expanding upstate cities like Albany is also a plus.

Be cautious of contaminated sites that require extensive remediation. Confirm no easements or other limitations are attached to deeds.

Upstate cities and rural areas provide the most options for those looking to buy raw land on the cheap. However, downstate suburban counties like Putnam, Dutchess, and Orange may also have pockets of undeveloped land left.

Residential Development Land

Land zoned for housing provides opportunity but also risk. While suburbs continue to sprawl outward from NYC and upstate cities, shifting homeowner preferences may result in oversupply of certain housing types.

Concentrate on land permitting construction of in-demand housing like townhomes, duplexes, apartments, and mixed-use buildings rather than big single family subdivisions. Proximity to major roads, public transit, amenities and employers is ideal.

Downstate suburban counties, upstate metro outskirts, and high-growth upstate cities like Kingston are worth considering. Just beware NIMBY opponents of development. Partnering with an experienced local developer is wise.

Commercial Development Land

Well-located parcels suitable for retail, offices, medical complexes, or hospitality may reward patient investors. Commercial real estate construction is rebounding post-COVID as firms hire and invest in physical space again.

Target higher-income suburban counties and upstate metro areas along major highways, intersections, transit hubs, and traffic arteries. Make sure zoning allows intended use.

A range of commercial uses are viable -- from local neighborhood strip malls to big box stores and auto dealerships. However, the rapid rise of e-commerce may blunt demand for traditional retail space over the long run.

Agricultural Land

Though less common downstate, quality farmland exists, especially on eastern Long Island. Upstate has abundant high-quality cropland, orchards, vineyards and pastures. Farm and forest also provide tax advantages.

Look for parcels with prime soils, water access for irrigation, and moderate slope. Proximity to agricultural infrastructure and processing facilities boosts value.

Farming itself earns only modest returns but long term appreciation can be strong. Top cropland in prime upstate counties trades for up to $10,000 per acre.

Some agricultural land may have residential or commercial development potential once suburbs expand outward. However, sweeping views and privacy make farms ideal for rural luxury residential compounds too.

Recreational Land

15% of New York’s vast land area is public parks, preserves, and protected wilderness. However, private recreational land can also prosper.

Camps, RV parks, ranches, golf courses, retreat centers and other hospitality properties capitalize on New York’s natural beauty and ample water resources. Tourism and outdoor recreation are big business.

Target recreational land within a reasonable drive of major population centers, ideally with water frontage, mountain vistas, forest access or other attributes. Don’t rule out once-industrial sites suitable for remediation and repurposing.

Be cautious of the extensive costs of developing hospitality properties sustainably to avoid environmental backlash.

Distressed & Tax-Delinquent Property

When owners stop paying taxes, properties fall into arrears and eventually face seizure auction. Private buyers can scoop up vacant land and homes for bargain prices.

However, back taxes and legal fees must also be paid. The condition of structures may be poor. And low-income communities are most impacted by tax delinquency, limiting markets.

Proceed with caution if buying distressed land and buildings. Partnering with a local organization experienced in community revitalization is advisable to surmount challenges. Remediation and rehabilitation costs add up quickly.

With careful due diligence and by tapping into incentives and grants, strategic buying of tax-delinquent properties in cities like Buffalo, Syracuse, Rochester and Albany can still unlock opportunities.

Final Words

While buying vacant land or agricultural land across New York requires extensive research and caution, patient investors can be rewarded if they target the right markets and opportunities. From raw upstate acreage to a condo development site minutes from Manhattan, diverse options exist.

The key is sticking to high-growth areas while securing properties at reasonable acquisition costs. Then investors must accurately project development expenses and timeframes, potential sale prices, and expected returns. Or for buy-and-hold owners, assess likely long term appreciation and income generation.

New York's complex regulatory and tax environment make it critical to consult experts in law, finance, development, and real estate. While land ownership presents headaches, those willing to tackle the challenge head on can still profit.

With its dynamic economy, wealthy population, popularity with immigrants and visitors, and slowly improving upstate prospects, New York offers real estate investors and land developers stiff competition but also outsized rewards for those bold enough to stake their claim.

Frequently Asked Questions (FAQs)

What are the main benefits to buying vacant land in New York?

Some of the top perks include future price appreciation if the area continues developing, low property taxes initially, and the ability to eventually build your dream home, farm, or other facility. Rural acreage offers privacy, scenery and recreational potential. Land within commute distance of major metro areas provides more options to develop residential or commercial properties down the road.

What are the biggest risks and downsides to be aware of?

Challenges like high regulations, contamination issues, lack of infrastructure, struggling local economies, and excessive property taxes once improvements are made can quickly turn promising land into a headache. Do in-depth research before purchasing any parcel.

Which areas of NY tend to provide the best ROI on land investments?

If buying land for future development, target high-growth areas downstate and upstate. Albany, Kingston, Poughkeepsie, Buffalo and Rochester metro outskirts are promising. For recreational properties, look at areas within reach of major cities and desirable for tourism. Research the local housing market's strength.

Does New York offer any incentives or tax breaks for land conservation or agriculture?

Yes, NY has programs like 480a forest exemption, Agricultural Districts, and various conservation easements that provide tax incentives. These can make owning rural land more feasible. Farming and sustainable forestry boost chances of qualifying for breaks.

What professional help is recommended when researching and purchasing NY land?

Consulting local real estate agents, land developers, lawyers, architects, engineers, contractors, and financing specialists is wise. They can help assess zoning, approvals, site conditions, utility access, remediation needs, development costs & timelines, and profit potential. A team approach is best.

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