Is there demand for leaseable land to grow grapes in Northern Virginia?
Rough Transcript: I recently had a pretty interesting conversation with a couple of folks in the Virginia wine industry. Specifically, we were talking about the demand for leaseable land to grow grapes.
What I learned from these conversations is that wine grape production in Virginia is up this year, in terms of both quality and quantity, and this followed a difficult season for a lot of vineyards and wineries in 2018.
However, the problem this year is that some growers struggled to find buyers for their grapes. So, 2019 has kind of been a rebound year from 2018, but because of surplus grapes in the market, the demand for land to grow grapes could be a little shaky for the next couple of years.
The reason I even had these conversations is because I was talking to an owner who was interested in possibly leasing his land to a grape grower. So, unfortunately for this owner, leasing land to a grape grower is probably not a viable option in the current market.
Beyond the question of demand, there are other considerations to think about when it comes to leasing land to a winery or grape grower.
Vineyards take a long time to turn a profit. Realistically, maybe 3 to 5 years before the vines are established and the grapes can be harvested or sold for wine production; and significantly longer than that to recoup the initial investment.
So, from a leasing perspective, the first challenge is agreeing to a sufficiently long lease period with certain assurances to the grape grower, and the second challenge is making it financially feasible.
For example, it costs about $15,000 per acre per year to establish a vineyard in Virginia, not including the cost of the land. So you can see how the startup costs add up pretty quickly during the first few years when the vineyard isn’t generating any income.
A more viable option for land owners – instead of leasing land to a grape grower – is to lease to a farmer to plant row crops, such as corn, that are planted and cultivated annually and produce a profit quickly and predictably.
If you’ve got any questions about buying, selling, or leasing land in Northern Virginia, contact Jonathan at 202-750-4050 or Kennedy@KennedySellsVA.com.