MT. JULIET, Tenn. (DTN) -- Lots of farmland in Illinois traded hands for more than $20,000 per acre in 2023. Plenty sold for even more than that, but most of that ground had development potential.
While there are many price factors at play, on average 40-acre or larger fields of commercial farmland sold for $12,989 per acre in 2023, according to transaction data analyzed by AcreValue.
AcreValue pulls public data from more than 40 sources into a searchable, geographic format, enabling users to find detailed data on individual parcels including sales records, soil maps, crop history, proximity to utilities and more.
DTN is teaming up with AcreValue to share insights into farmland trends, starting with examinations of high-priced sales in several Corn Belt states. DTN used AcreValue's database to identify sales and ownership trends, and its Market Explorer feature identifies statewide trends.
Then, DTN cross-checked buyer and seller names with other publicly available information to provide context to the timeless question: Was the buyer a farmer or an investor?
Doug Hensley, president of real estate services at Hertz Farm Management, told DTN previously that farmers buy approximately 70% of the land that comes to market, and there are three primary types of investors. Hensley was not involved in DTN's analysis of AcreValue's data.
The first type of investor are institutional buyers, like TIAA-CREF, Prudential or the Church of Jesus Christ of Latter-day Saints, commonly known as the Mormon church. While reviewing the data for Illinois's Top 10 farmland sales, DTN saw a few LLCs associated with these buyers, even though they didn't make the list of highest sales.
The top sale, however, was purchased by a different institutional investor: PGIM U.S. Agriculture Fund LP, which advertises $10.3 billion of agriculture assets under management on its website.
The most common type of investor, Hensley said, is someone who "grew up in an area and they've either inherited or bought farms, and they want to continue to add on to whatever they own because it's an important piece of their portfolio."
Then, there are what he calls "pure-play investors," individuals seeking the best return on their money, like Bill Gates. In the era of near-zero interest rates, cash rents provided a reasonable annual return. But in today's interest rate environment, those investors may opt to put money into other investments, like a risk-free CD with potentially higher earnings.
A few of the other buyers on the list appear to fall into the local investor or pure-play investor buckets, but that cannot be said with certainty because they may have farming connections we are unaware of.
HOW DTN IDENTIFIED SALES
AcreValue shows there were 17,792 sales of all kinds of farmland in Illinois in 2023, and most did not meet DTN's search criteria, which was geared toward sales of land that would remain in crop production.
To narrow the search, DTN only included parcels of 40 acres or more with a soil productivity index (PI) of 133 or higher, which meets the definition of Class A farmland. At least 92% of each field needed to be used for crops, which filtered out wooded tracts with high recreational use. We also set a minimum price of $17,000 per acre to limit the results. AcreValue showed 138 sales matching our criteria.
From there, DTN sorted through the results to exclude sales where development potential appeared to play a role in the price. We did this in several ways. In some cases, the name of the buyer was all we needed, such as Loves Travel Stops and Country Stores. In others, the location was key. Many of the sales with $30,000 price tags were right off an interstate exit, adjacent to an industrial area or likely to form a new subdivision.
DTN also excluded sales between known business associates or family members. We did this by researching business entity registrations since many of the sales in our search were purchased by limited liability companies and partnerships. We also reviewed AcreValue's data on nearby landowners to gauge ownership trends in an area. In at least one case, this turned up other properties jointly owned between the buyer and seller.
More often, this review of nearby property ownership told an interesting story about why a buyer might be interested in a particular piece of property. In several of our Top 10 listings, the land was adjacent to the buyer's property or property owned by people with the same last name.
All the data used to compile this story is publicly available. AcreValue incorporates a wide array of public data into its database. You can read more about AcreValue and what it does here: https://www.dtnpf.com/….
You can also visit its website at www.acrevalue.com to start a free trial or contact sales at sales@acrevalue.com to learn more about an account for your business.
DTN expanded its search to business entity registrations on secretaries of state websites as well as Google searches to compile more details on the sales below.
TOP 10 ILLINOIS FARMLAND SALES IN 2023
1) $26,416/acre, Champaign County. The buyer purchased 647.61 acres, an entire square-mile section, for $17.107 million in March 2023. The property had four contiguous parcels and included several grain bins and buildings. The farm's average soil productivity index is 138. The buyer's LLC is managed by PGIM U.S. Agriculture Fund LP, an institutional investor that boasts more than $10.3 billion of agricultural assets under management.
2) $26,058/acres, McHenry County. The buyer, whose LLC is associated with a family that owns car dealership assets in the Chicago area, paid $1.81 million for 69.46 acres. The sale was divided into two tracts -- 68.4 acres of farmland and a home on 1.1 acres -- and was completed last spring. The farm's average soil productivity index is 123.
3) $25,937/acre, Bureau County. The 115.67-acre farm sold for $3 million. The farmland is adjacent to a large hog farm and the buyers are also associated with several LLCs suggesting hog production. The farm's average soil PI is 140. The sale was completed in August 2023.
4) $23,800/acre, Hancock County. A local farm partnership purchased the 40-acre farm for $952,000 in March 2023. It has an average PI of 144. This is an AcreValue-verified sale, which means a licensed real estate professional confirmed the terms. It was reported as an auction, but DTN couldn't locate the original listing. What makes this sale interesting is that it's directly across the street from our No. 6 top sale with different sellers and buyers.
5) $23,751/acre, Kendall County. Two adjacent 40-acre parcels totaling 80.84 acres sold for $1.92 million. They had an average PI of 138. While this land is just outside of Oswego, Illinois, which is on the very outskirts of Chicago, it is surrounded by farmland, and DTN couldn't find any records suggesting imminent development. The buyer is a numbered trust.
6) $23,632/acre, Hancock County. This 40-acre farm sold for $945,300 in February 2023, just 15 days before the No. 4 sale on our list. It has an average PI of 147, and the buyer owns adjacent parcels and hog barns nearby. This is also an AcreValue-verified sale.
7) $23,452/acre, Logan County. The 81.87-acre farm sold for $1.92 million in September. It has an average PI of 136. Family members own the fields directly to the north and south of this property in addition to other land nearby.
8) $23,143/acre, Warren County. The buyer paid $1.806 million for 78.06 acres with an average PI of 137 in October. DTN found the original auction results and the buyer also purchased two adjacent approximately 80-acre tracts at that auction, paying an average of $22,875 for the combined 244 acres.
9) $23,000/acre, Morgan County. The buyer purchased a 78-acre tract for $1.794 million and an 80-acre tract for $1.84 million. The adjacent tracts, with average PI scores of 143 and 142, were sold at auction in October. DTN couldn't find any other records of farmland ownership by the buyer.
10) $22,975/acre, Knox County. A 144.74-acre farm sold for $3.326 million in December. The property was divided into two nearby tracts with an average PI of 137. The buyer owns several properties in the county.
Katie Dehlinger can be reached at katie.dehlinger@dtn.com
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