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Knowledge

From Crops to Capital: Why Farmland Is Gaining Ground

In a world of rising uncertainty, investors continue to seek assets that can deliver true diversification, income, and resilience over the long term. Farmland, once considered the domain of farmers and rural families, is increasingly recognized as a strategic alternative investment for accredited investors.

Unlike equities or bonds, farmland’s performance is grounded in agricultural productivity and demand for food — forces largely detached from market sentiment. Historical data underscores this independence. During the 2007–2009 financial crisis, while U.S. equities lost over half their value, farmland continued to generate positive returns, tied not to Wall Street but to the value of crops and the land itself.

Farmland’s inflation-hedging qualities are equally compelling. Over more than a century, farmland values have demonstrated a strong positive correlation with the Consumer Price Index, far surpassing traditional financial assets. Lease structures, typically reset every one to three years, allow landowners to capture rising commodity prices in real time — a structural advantage during inflationary cycles.

Beyond stability, farmland offers a dual return profile: steady annual cash yields from rental income (historically 3–5% unlevered) and long-term capital appreciation as land values rise. For example, Iowa farmland from 1970 to 2021 produced average annual total returns of 12.7%, split almost evenly between cash income and appreciation.

While direct ownership requires significant capital and expertise, accredited investors increasingly access farmland through private syndicates and funds. These vehicles pool capital, leverage professional management, and diversify by geography and crop type — mitigating risks like weather events or commodity volatility. Importantly, these structures often provide tax advantages through pass-through K-1 reporting, depreciation deductions, and other incentives.

Today’s environment may represent an attractive entry point. U.S. farmland values have hit record highs, yet short-term pressures — softer commodity prices and higher financing costs — could create acquisition opportunities for well-capitalized funds. For investors seeking assets backed by fundamental human need, farmland remains a scarce resource with enduring value.

Farmland is not without risks: climate change, liquidity constraints, and operational variability must be weighed carefully. But for patient capital, the asset class offers a compelling balance of income, appreciation, and protection against macroeconomic shocks.

This brief is for educational purposes only and does not constitute investment advice. Accredited investors should consult their financial and tax advisors before making any investment decisions.

Transparency

CMBS Payoff Rates Signal CRE Stress Point

repp reports that the commercial real estate market is hitting a critical stress point: 34% of fixed-rate, private-label CMBS loans maturing between 2020 and April 2025 failed to pay off or refinance on time. That’s a sharp decline from pre-pandemic levels, when more than 80% of loans typically resolved at maturity.

Office and retail assets drove much of the underperformance, with 40% of office loans and 35% of retail loans missing their scheduled payoff. Mixed-use fared even worse at 46%. By contrast, industrial and self-storage posted payoff rates above 95%, while lodging, multifamily, and other residential types largely recovered.

The study also found that stronger credit fundamentals—particularly higher DSCRs—were a clear predictor of successful payoffs. As the 2025 “maturity wall” approaches, Trepp warns of widening uncertainty across CRE, with office and retail remaining the sectors most at risk.

Secondary Texas Cities Lead a Rent Growth Surge

Midland is projected to lead Texas in multifamily rent growth—forecasted at 5.5% over the next five years, according to Markerr’s top Texas markets report. Odessa (5.1%) and Waco (5.0%) also rank among the strongest growth markets. Tertiary markets across the state outpace large metros like Austin, which is expected to see only 1.9% rent growth, likely hampered by persistent supply issues.

This trend reflects a broader shift: smaller markets are providing healthier rent growth due to tighter supply-demand balances. It confirms what local reports in the Midland-Odessa region show: through Q1 2023, Midland posted an astounding 18.1% year-over-year rent increase, with nearly full occupancy and strong job gains tied to the energy sector.

Why it matters: For investors and developers, this highlights opportunities in secondary Texas markets—not just the big cities. As supply remains constrained and demand rises, these markets may offer stronger performance and more stable returns in the years ahead.

Industrial Real Estate Faces Post-Tariff Turbulence

The U.S. industrial market is showing mixed signals midway through 2025. According to Newmark, leasing activity remained solid—up 2% year-over-year to 215 million square feet—even as vacancy rose to 7.4%, the highest in a decade. Net absorption fell by 47.4 million square feet, marking the first negative quarter in over 15 years, with older and newly delivered properties hit hardest. Elevated corporate bankruptcies, such as JOANN’s, have further added to warehouse vacancies.

Despite headwinds, demand persists in well-positioned markets like Dallas, Chicago, and Greenville, SC, as tenants seek efficient, cost-saving space. Average rents held steady at $10.50 per square foot, while the development pipeline shrank for an 11th straight quarter. Longer term, e-commerce and AI-driven retail are expected to fuel industrial demand, while Southern states lead manufacturing investment. Still, Newmark cautions that lingering tariffs and weakened corporate liquidity could drive further turbulence in the months ahead.

Return-to-Office Push Fuels NYC Office Lending, but Recovery Remains Selective

In New York City, a resurgence in return-to-office movement is translating into tangible CRE momentum. $3 billion in new CMBS lending has been issued this year, boosting overall office lending activity to its highest level since 2021. Notably, high-profile refinancings—such as Paramount's $900M at 1301 Sixth Avenue and Durst's $1.3B on the former Condé Nast HQ—signal renewed confidence in well-located, blue-chip assets, particularly in Midtown.

However, analysts caution that this positive trend isn’t broad-based. Vacancy remains elevated at 12.7%, down only modestly from pre-pandemic levels, and equity investors remain cautious amid sluggish leasing and property income growth. It’s clear that RTO mandates are helping prime markets stabilize—but the overall office sector recovery continues to be uneven.

Mid-Year Multifamily Market Report: Key Insights for Investors

Summary:

Berkadia Research has released its Mid-Year 2025 Multifamily Market Reports, offering comprehensive insights into apartment market fundamentals and key demographic trends. These reports are designed to help commercial real estate investors make informed decisions about acquisitions, dispositions, and financing in the current economic climate.

Key Findings:

The national report highlights several key trends from the past four quarters:

• Demand surged: Apartment leasing nearly doubled compared to the previous year, with a net absorption of almost 794,200 units.

• Construction peaked: The multifamily construction wave appears to have crested in 2024, with over 535,800 units delivered in the last year.

• Occupancy rose: Strong housing demand and increased lease renewals pushed apartment occupancy up by 150 basis points, reaching 95.7% in Q2 2025.

• Rents accelerated: Favorable market conditions led to a 2.1% increase in monthly effective rent over the past four quarters, a significant acceleration from the 1.0% growth seen in the prior year.

Community

Platform Spotlight: AcreTrader

Farmland Access for Accredited Investors

The Platform at a Glance

• Structure: AcreTrader creates individual LLCs for each farm offering, allowing accredited investors to purchase fractional interests in farmland.

• Minimums: Typically start at $10,000–$20,000, depending on deal size.

• Hold Periods: Generally 5–10 years, aligned with farming cycles and crop types.

• Liquidity: No secondary market. Investments are locked until exit or sponsor-driven sale.

• Income: Investors may receive annual cash distributions (lease income or crop-share arrangements), plus potential appreciation at exit.

• Fees: Platform management fees and deal-specific fees vary; most are disclosed in the offering memorandum.

Why It Stands Out

AcreTrader differentiates itself by opening up institutional-quality farmland investing to individual accredited investors. Traditionally, access to this asset class required large checks, private partnerships, or REIT structures. AcreTrader simplifies the process with a vetted deal pipeline, streamlined subscription process, and clear reporting.

Farmland itself has compelling macro drivers:

• Historic role as an inflation hedge.

• Scarcity value: arable land in the U.S. is limited and shrinking.

• Global food security and population growth underpin long-term demand.

For accredited investors seeking uncorrelated cash yield and potential appreciation, AcreTrader provides a bridge into an asset class once out of reach.

Balance Sheet: Potential vs. Pitfalls

Potential Upsides

• Exposure to a historically stable, inflation-resistant asset.

• Access to both row crops (e.g., corn, soybeans) and permanent crops (e.g., almonds, apples).

• Transparent deal flow with supporting data and operator vetting.

• Passive ownership with professional farm management in place.

Risks & Limitations

• Illiquidity: Investors are committed for the full hold period with no early exit options.

• Operational Risks: Crop yields can be impacted by weather, water rights, and commodity price swings.

• Platform Risk: Investors rely heavily on AcreTrader’s underwriting, diligence, and farm operator relationships.

• Speed of Subscriptions: In my own attempts to invest through AcreTrader, I’ve found that deals often fill within hours of opening. While this speaks to demand, it also limits the window for due diligence. Reminds me of deals I invested in with the Crowdstreet platform see review here.

• Capital Tie-Up: AcreTrader requires funds to be pre-deposited into a wallet. If a targeted deal fills before you can subscribe, this can leave capital sitting idle without immediate deployment options — a drawback for those looking to stay nimble.

Final Word

AcreTrader is a thoughtfully designed platform that makes farmland investing accessible for accredited investors, but it comes with constraints. The scarcity of offerings and the speed at which they are subscribed mean that investors need to monitor offerings closely, have capital pre-positioned, and be prepared to act quickly.

For those comfortable with illiquidity and the nuances of farmland, AcreTrader can be a differentiated addition to an alternatives portfolio. For others, the rapid subscription cycle and wallet funding requirements may prove frustrating.

Sharing Our Collective Wisdom: Building a Transparent Community

Navigating the accredited investor landscape takes time and experience. That's why I'm committed to sharing my learnings with you. As a CredVesting member, you'll have access to my reviews of platforms and sponsors I've encountered – insights designed to help you invest more wisely.

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