State auctioning surplus farmland at height of market

The state of Indiana plans to take to auction this week almost 670 acres of prime farmland in Madison County at a time when farmland prices are flourishing.

The land just southwest of Pendleton between Interstate 69 and U.S. 36 is adjacent to the state’s Pendleton Correctional Facility. The State Department of Administration hired Colliers International's auction division to auction the land as part of a sale of surplus state property.

The timing might not get much better for selling the nine tracts, which range from just more than 20 acres to almost 116 acres. The price of top farmland in Indiana rose 25 percent last year, to about $6,500 an acre, according to Purdue University’s farmland value survey.

Farmland prices have been on the rise for five years, dating back to about the time the economy began to sputter. Investors have been drawn to its safe, relatively steady income potential. There’s also relatively little of it for sale, said Craig L. Dobbins, a professor of agricultural economics at Purdue.

Even if the state sells its land at the top of the market for farmland, the amount won’t come close to what land in the path of development cost before the recession, which caused a development drought that persists today.

Abbe Hohmann, a senior vice president at Cassidy Turley, recalls that land for single-family home development once sold for seven to 10 times the per-acre price farmland commands today. Prices were even higher for land that could be developed for industrial, office, apartment and retail uses. Pre-recession, Hohmann sold a big-box retail site for $200,000 an acre.

Those prices only applied to land that was clearly in the path of development. Hohmann said the land the state is selling near Pendleton probably wouldn’t have been a hot commodity for development even in better times. One 110-acre tract touches I-69, but access to the site isn’t such that it would have drawn much developer interest, she said.

The auction is set for Jan. 19 at 10 a.m. at the Garden Hotel, 5920 S. Scatterfield Road, Anderson. More information on the auction and the property for sale is available here.