Several North County wineries, vineyards have been sold recently

Buyers snapped up several Paso Robles-area vineyard properties and wineries in recent years, capitalizing on tough economic times that brought some good deals to the real estate marketplace.

In 2013 and 2014, five winery properties sold at an average price of $3.2 million, varied in size from 15 to 54 acres and were small to midsize in production, according to a report released last month by Pacifica Wine Division, which began tracking prices and transactions about a year and a half ago.

Pacifica Wine Division is part of Pacifica Commercial Realty, a Paso Robles-based commercial, industrial and investment real estate company.

Of the five wineries sold, Eagle Castle Winery was the largest transaction at $4.86 million.

The sale involved a 25-acre parcel with an 11-acre vineyard, two residences, a 7,900-square-foot tasting room and hospitality building and a 13,000-square-foot winery building, according to the report.

The other four winery properties that sold were Edward Cellars, Chumeia Vineyard, Berardo Vineyard & Winery, and Veris Cellars.

During the same period, 18 vineyards sold at an average price of $2.24 million. The average property sold was 54.8 acres with an average planted vineyard of 23.8 acres.

The largest vineyard transaction was 5225 Buena Vista Drive. The $8.5 million sale included 342 acres on four separate parcels as part of the entire estate, which features a 92.5-acre vineyard, a 126-acre pistachio farm and a 3,279-square-foot home.

Most of the winery and vineyard sales in the past two years were either asset-only or distressed sales, said Paul Shannon, associate at Pacifica Wine Division and Pacifica Commercial Realty.

“Right off the bat, the recession drove all the prices down,” he said. “Land as a whole, residential, vineyard and winery properties during the recession took a hit. If you built a winery during the recession and it took a hit, it wasn’t worth as much, and some people just didn’t have the income to maintain it.”

With the economy slowly strengthening, there will be fewer distressed and asset-only sales, Shannon said. Buyers are looking beyond purchasing just land and buildings and are seeking out vineyards and wineries with brand recognition.

“They want to grow the business,” he said.

Pacifica’s report noted that there haven’t been that many brand-name acquisitions since Justin Vineyards and Winery sold in 2010 for $21 million to Roll Global.

Although there are still good prices available, and “guys in Napa and Sonoma are looking to buy vineyards here,” Shannon said, prices will increase in coming years as supply dries up and access to water remains limited.

The San Luis Obispo County Board of Supervisors approved an urgency ordinance on Aug. 27, 2013, that prohibited new development or the planting of irrigated crops within the Paso Robles groundwater basin unless water use could be offset on a 1-1 ratio.

The ordinance was passed because of declining water levels in the Paso Robles groundwater basin, causing some basin residents to deepen their wells to keep water flowing to their homes.

“Because of the water moratorium, it will be harder and harder to buy an undeveloped piece of land and plant a vineyard on it,” Shannon said. “The price per acre is going to go up.”

The price will depend on a variety of factors, including where a property is situated, growing conditions and available water, he noted. Vineyard prices in the Paso Robles AVA (American Viticultural Area) could range from $40,000 to $50,000 an acre.

“An existing well with good production will help a vineyard hold its value better than ones that do not (have one),” he said.

“It would be a good time to buy if you can find a good property with some water,” he added.

It’s unclear whether the ordinance will expire in August 2015. On Feb. 3, supervisors decided 3-2to let that happen. But on Feb. 10, they reversed that decision on a 3-2 vote and voted to discuss extending a temporary emergency ordinance to manage the dwindling groundwater basin.

New state legislation is expected to be enacted that would establish a groundwater management district.

No matter what supervisors ultimately decide, Shannon believes that restrictions and any future action to limit water use will help to drive prices up.

“Who knows what’s going to happen,” he said. “I assume that sooner or later, they will come up with some sort of permanent program and regulations.”