Blakeslee & Crain is committed to making sure an agricultural property’s price is right.
Success has one very simple trick: Take something that works, then add value to it with an innovative twist. OK, maybe the “innovative twist” isn’t quite so simple, and even after that, you still have to do the job with sufficient consistency and rigor so as to develop a reputation for reliability. But those last parts—consistency and rigor—are pretty simple and straightforward. And they do work.
Now that you mention it, maybe all those things do take a certain effort that’s beyond the norm. But that’s what distinguishes those who survive and succeed from those who merely make an effort and then disappear. You surely recall the Southern preacher making the distinction between mere involvement and total commitment? “Take a look at a plate of ham and eggs,” he thundered. “The chicken was involved, but the pig was committed.”
Chris Blakeslee and Michael Crain understand the need to commit. Not content to merely assess a Wine Country property’s agricultural (and residential) worth, they’ve extended their services by becoming capable of brokering agricultural deals as well.
“Buyers looking for vineyard properties to fulfill their romantic Wine Country dreams often have the money but no agricultural background,” says Crain, whose 17 years in Bay Area real estate include a stint with L.J. Hooker International (in San Francisco). “They don’t know how agricultural easements, erosion control ordinances and water conservation issues might affect their plans. But those all have an effect on the ultimate value of the property. When we’re working for a seller, our job is to help him or her understand what they have and what restrictions might apply to constrict the property. We want sellers to be able to operate from an informed position. Once we define and validate the property’s value, then we can provide full marketing and sales activities, because we understand both agriculture and the specialized market that Wine Country has become.”
When Blakeslee and Crain are working on behalf of buyers, their job is to identify and select suitable properties. They’re able to advise clients on issues ranging from economic feasibility and market value to soil and water quality. To best do that, they’ve trademarked what they call their “value point analysis service.”
“Michael and I have been doing this for a half century, combined,” says Blakeslee, a marathon swimmer who’s crossed the English Channel in less than 15 hours and San Quentin Beach to Alcatraz in five hours. “Buyers and sellers rarely have adequate information about rural property values when embarking on transactions. The complexities inherent in valuing ‘stand alone’ vineyard land—or vineyard parcels with residences or home sites—can be daunting.
“Our ‘value point analysis’ makes use of advanced satellite-imaging technology. This process maps properties to determine the agricultural health of existing vineyards and the development potential of unplanted land. It also gathers information about improvements, such as homes, ponds or barns. That’s where our appraisal experience comes in: We’re able to interpret this data to determine the real value of a property.”
The big picture
I’m browsing through an actual value point analysis of a vineyard parcel (the name is blacked out for confidentiality) near Windsor. Beyond the beauty shot of the home, outbuildings and land on the cover, the guts of the report lay the property bare. There are six map overlays and a wine appellation map.
An aerial map precisely lays out the boundaries of ownership. The United States Geological Survey topographic map points to the aspect and slopes of the land and gives an indication of just how much of the property can easily be planted to the vine. A United States Department of Agriculture soils map pinpoints the five (in this case) soils that make up the land itself, with the relative slope factors that come into play with regard to potential erosion problems. The good news here is that much of the land is Goldridge fine sandy loam, which is excellent if the buyer has notions of planting Pinot Noir.
The slope classification map locks in the exact slope circumstances of the property, while the aspect map details the directional facings of those slopes (important in determining which direction the vine rows will face and for determining how warm a site will be due to sun exposure). The approximate plantable acres map gives a close reading of just how much of the parcel is amenable to the grape, while the appellation map clearly places the property within the heart of the Russian River Valley American Viticultural Area—a prime spot for Pinot Noir.
“Wine appellations are really driving the market today,” says the tall, rangy Crain. “The Russian River Valley appellation, for example, has really evolved. Ten years ago, bare land in that area might have gone for $10,000 an acre, perhaps a little more. Today, you’re looking at $70,000 an acre for unplanted land—and even that’s a minimum estimate. The main engine for that change is wine consumption and wine appreciation. People are willing to pay extra for quality that’s in the glass. Pinot Noir has become something of the ‘go-to’ varietal, especially here in the Russian River Valley now that people associate the region’s quality potential with that of Burgundy. That, and the awards the local wineries have been receiving over the last few years.”
Blakeslee, a Cal Poly (SLO) grad who once managed large ranches and worked for Crocker Bank in San Francisco as agricultural portfolio manager, suggests it’s more than just the movie “Sideways” that’s pushing the sales of Pinot Noir. “The movie helped—no doubt—but people are expanding their wine horizons. One of the indicators of vineyard value we look to is bottle prices. That gives us an idea as to how important an appellation is getting to be. Santa Rita, the region in Santa Barbara County that was highlighted in the movie, still lags behind the Russian River Valley. The wines are getting similar awards and the bottle prices are similar, but the actual land values in Santa Rita—while they’ve gone from $25,000 to maybe $50,000 an acre—are still less.”
Because of their combined experiences, the pair, who joined up five years ago (and recently relocated their offices from Petaluma to Sonoma), are often called in by banks to get a better handle on a property’s true value. “Our value point analysis report is confidential to our clients and serves as a solid reference point through the negotiating process,” says Blakeslee, who’s responsible for appraisals. “It can also create an interactive, aerial ‘virtual tour’ of large ranches and estates that we can email as digital files, or post on our website. That way, a buyer in New York can view a property here in Sonoma County almost instantly. It gives us a global marketing reach.”
They want the information to be as comprehensive as possible. Says Crain, “The imaging files may include disclosures, well and soil data, rootstock types, clonal types, construction materials and more. It’s not just a pretty video and photographs. It’s a complete visual and informational representation of the property. And it’s not just that we have information, but that we’re able to interpret that information to the benefit of either the seller or the buyer. We have both sides covered; this product combines appraisal and brokering.”
It’s in the details
Blakeslee and Crain put out a quarterly newsletter called The Dirt, which offers tips and information to clients and potential clients. A recent issue offered analysis of the Williamson Act, cautioning that restrictions in the state’s conservation laws might diminish any potential property tax savings; a detailed explanation of the company’s value point analysis service; a listing of prime agricultural properties currently available and the in-depth story of how one problematic property was rendered suitable for sale.
That was the Nicholas Turkey Breeding Farms property on the eastern edge of Sonoma. “We represented the buyers, Palm Drive Vineyards, which is a partnership of wine industry veterans Andrew Mariani, Andrew Avellar and Kristof Anderson,” says Crain. “The property was on the market for three years, but no one had been able to figure out what it was worth because of the large turkey sheds, multiple houses, conservation easements and environmental concerns. It was a very complex property to assess. We were able to establish a value and move the process through to a successful conclusion.”
Originally offered at $5 million, the 256-acre turkey ranch ended up selling for a shade under $4 million. Planted to grapevines in the mid-19th century by German immigrants, George Nicholas converted the property into an internationally known turkey breeding operation in 1939. Palm Drive Vineyards is currently planting 60 acres, primarily to Pinot Noir and Chardonnay, with some White Riesling and Zinfandel.
“We see ourselves as sort of a one-stop shopping place for agricultural and estate properties in Wine Country,” says Blakeslee. “Michael and I have a lot of abilities, and we’re also affiliated with vineyard managers and soils labs, so we bring a lot to the table.”
“When you consider the value of land these days,” adds Crain, “that 5 or 6 percent that goes to the broker can be a lot of money. The fact that our experience and breadth adds value to the transaction, well, that gives us a competitive advantage. People often over- or underestimate acreage, but given the selling price of land today, if you miss 10 acres on a 70-acre parcel, that’s a big mistake! We’re trying to apply a higher standard to this business—trying to get more accurate—and we’re not aware of any other company in the county that offers everything we do under the same roof. And while our visuals—all the maps and charts—might seem impressive on their own, it’s the fact that we know how to interpret that information and draw useful conclusions that sets us apart. We’re not guessing.”
He continues: “Understand, we’re not going to be competing with Coldwell Banker for residential housing deals. But if a home is involved in a farm or agricultural deal, that we do. The key to all of this is a comprehensive understanding of land values. As a seller, you want to get full value; as a buyer, you don’t want to overpay. To get a real estate license, you don’t have to get any training in or have any experience in valuation and appraisal. But, especially when you’re combining agricultural and residential, those co-existing uses can become very complex.
“You might say, ‘Well, just do a competitive market analysis,’ but CMAs don’t work for rural properties. It’s fine in a solely residential neighborhood, where you can take any half dozen houses and they’re essentially the same. You get out into a rural setting, and there’s little or no conformity as to parcel size, house plan or whether it has vineyards or not. Everything is different, and it takes a lot of experience to come up with an equitable valuation.”
Who are these guys?
Blakeslee and Crain present a series of seminars each summer for anyone interested in the business of viticulture and wine. “We talk about winery construction, permitting and financing, and bring in speakers who know their subjects well,” says Blakeslee. “We do four seminars each year—we’ve done them for the past few years—and people seem to get a lot out of the information.
“We talk about the upside and downside to leasing. For a winery, the upside is they don’t have to come up with the cash to buy the land. The benefit to the landowner is that they don’t need to acquire the expertise in viticulture to have vineyards to generate income. Long-term leases can cause problems with estate planning, though, and may encumber the title when the land is sold.”
Blakeslee is a Southern California native. “I grew up in Carpinteria [near Santa Barbara] on a small farm. My father grew lemons and avocados. I went to Cal Poly at San Luis Obispo, where I majored in agricultural science and minored in farm management and viticulture. That was a school where you got your hands dirty driving a tractor, which reinforced what you learned in the classroom. It was a great school for me.” (When asked, Blakeslee is unaware of the fact that Carpinteria was once home to the world’s largest single grapevine, whose trellis-supported arbor covered two acres. Ironically—or fittingly, depending upon how you see such things—the vine capitulated in 1920…at the onset of Prohibition.)
Crain is a Bay Area native, born in San Mateo and raised in the Sonoma Valley, who confesses to having only “dabbled” at college. “I went into real estate, leasing commercial properties in San Francisco, then went to Wells Fargo, where I was a commercial loan officer. I then worked for Cambial Financing, heading up a partnership that invested in vineyard properties I recommended. The partnership that Chris and I have created over the last five years almost perfectly meshes the skills each of us brings to the table. I bought a home up here, got my appraiser’s license, met Chris, and worked for him as a subcontractor for a year and a half. We decided to merge in April of 2003, and the rest is history.”
“That was right after the re-fi boom,” laughs Blakeslee. “There was a lot of appraising to be done, but it was a real grind. All residential. Volume stuff. Tough.”
Supply and demand
“Today, the supply of quality vineyard sites is going down, while the demand is growing,” says Crain. “According to Turrentine Wine Brokers, buyers are looking for more Sonoma and Napa Chardonnay and Pinot Noir. Look at the nonbearing acres today, and they’re very low for both those varieties, and even for Cabernet Sauvignon. We’re still a couple years away from coming into balance with all three of those varieties. The shortage of Pinot Noir is acute; for the other two, it’s just ‘shortage.’ Even with all the competition from foreign wineries, we need to plant more grapes.
“For land owners, the issue has always been the quality of the land. We produce some of the best quality wines from our land here. Then you add in the ‘appealing lifestyle’ factor, and the prices go up. And there’s still a financial incentive; there’s still money to be made up here if you do it right. Think about it: If you had unlimited dollars, where would you choose to live? Santa Barbara is nice. Monterey is nice. But this place is special—for the lifestyle and for the quality of the wines we make here. After these places, the quality level drops off. Plug in the anti-growth sentiment, limited water, limited sewage treatment capability and the limited expansion of Highway 101, for example, and the supply is limited and the demand is high. This is a great place to live.”
An avid golfer and fly fisherman, Crain and his wife Anya are active supporters of the new Sonoma Valley Museum of Art (right across the street from the company’s Broadway Street offices in Sonoma). “There’s an exhibition of Goya’s etchings on now, and upcoming we have Picasso. Chris and I are sponsors of the museum. It’s important to be involved in your community, to be committed to it.”
Both Blakeslee and Crain are optimistic about the wine side of the equation. “When you see the close plantings, the focus on sustainable farming and the intense attention given to grape and wine quality—this is how California wine producers have been able to survive the challenges brought by foreign winemakers,” says Crain. “To compete with the influx of foreign competition, we’ve become more efficient and developed marketing niches. Intense attention has been given to grape and wine quality.
“Yes, we’re able to compete with them in part because of the weak dollar. But more important, we’re able to compete with them at the highest level of quality. Because we have the cooling fog at night and warm days, we can grow the best grapes in the world. It’s hard to beat that.”
