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Gleason, Smith and Foster are in the process of developing a price index for the domestic real estate market that will establish a benchmark for wine grape growers and vineyard owners for average prices paid for planted land. While the index won���t take private sales into consideration, it will track both commercial and lifestyle transactions. ���We���ve seen considerably more activity in the last quarter (of 2012); of almost 40 listed properties sold in Sonoma County and Napa Valley, about 70% of those sales were to lifestyle clients,��� Gleason stated. Cornish & Carey is seeing more lifestyle purchases and fewer commercial winery purchases due to an oversupply of production facilities. ���Wineries are being leased to other producers, and owners of multiple production properties are consolidating their operations to reduce costs,��� Foster said. primary factors that help determine property value, including the right combination of microclimate and soil type, and the availability of water, which is playing an increasingly important role in the West, where there is more demand from urban and environmental users than supply. agreed. ���There is nothing left to be developed here,��� he said. Ericson said he sees movement in outlying regions where low-priced properties that have been on the market for some time are now starting to move. ���Companies with little or no debt are looking to increase production and we���re clearing out the dead SIGNS OF CHANGE When asked to cite trends for wine industry real estate in Northern California, accredited rural appraiser Tony Correia pointed to E. & J. Gallo���s recent purchase of the 800-acre Snows Lake Vineyard in Lake County. ���The most significant trend in terms of real estate is the emergence of wineries as buyers, and signs that they are buying aggressively,��� he said. ���When companies like Gallo and Kendall-Jackson are out chasing deals, it signals a sea change for the market.��� Correia, who lives Sonoma and operates Correia-Xavier, the largest agricultural appraisal business on the West Coast, appraises vineyard and winery properties in Napa and Sonoma counties, the Central Coast and California���s interior valleys, in addition to Oregon and Virginia. His is a rarified view of the industry and one that looks at a wide range of properties from the inside out. ���Vineyard properties are enormously complex and each one is unique, but the driving factor here in California is still location,��� Correia said. He named several other w w w. v w m media.com Properties in the Russian River Valley, such as this current offering from Cornish & Carey, are seeing lots of activity. ���The best sites in Napa Valley have been identified and are fully developed,��� said Correia, who is seeing more private sales facilitated by mergers and acquisition investment bankers and attorneys. Private sales are common in Napa, and Correia is seeing more taking place in Sonoma and on the Central Coast, but he does not track how they compare to listed sales. ���Due to environmental regulations, it���s becoming increasingly difficult to break out new sites in most of the coastal counties and in the heart of the Napa River watershed,��� he said. Correia anticipates the most development activity in Sonoma County and the Central Coast region of Paso Robles in the near term, and is more concerned with trends in the market than in development. Steve Ericson, an agent for Sotheby���s in northern Napa Valley, wood,��� he said. While increased sales indicate less resistance to the current price threshold, he said he believes much of what is currently on the market is overpriced. Cornish & Carey���s Foster cited the three most active real estate markets in the wine industry as Bordeaux, Napa and Sonoma. On the short list for development over the next five years, he added, are several sub-regions in Sonoma County, including Alexander Valley, the recently expanded southern portion of the Russian River Valley, and the southern sections in the Petaluma Gap area. BUYING CALIFORNIA���S CACHET While lifestyle properties may represent a smaller percentage of Corriea���s appraisal business, the cachet associated with life in Napa Valley and Sonoma County contin- J a n - F e b 2 0 13 | V I N E YA R D & W I N E RY M A N A G E M E N T 113