The 1500 Acre Project and a Shifting Supply/Demand Picture

Last year I represented a large renewable energy developer in the acquisition of more than 1,500 acres of land located in Adelanto. The project, known as Baldy Mesa Solar and Storage, will supply power to Amazon.

This was a great project to be a part of, for a lot of reasons.

The developer is a leading renewable energy company. The majority seller of the land is a household name in California real estate. And the ultimate buyer of the energy is one of the greatest businesses the world has ever seen.

My role in the project was very small. I just figured out where to find 1,500 acres. People smarter than me figured out the rest.

But I’m still pretty excited about the development.

To help you understand why, here’s a map of the project. If it seems like the land is at the end of the world, it’s not. Within a couple of miles of the site you can find millions of square feet of leased distribution space. Including by Amazon (unrelated to the solar project as far as I know).

Also, I should say that the solar project is under construction right now. This wasn’t a pipe dream land spec deal. You can drive to the site and see panels being installed.

A 1,500 acre project should be considered very large in any location. But this one will be developed in a market where supply/demand has been steadily shifting toward scarcity - a point that I think is escaping most investors.

To illustrate the shift from abundance to scarcity, I could point out that most of the developable lots in the market are already owned by homebuilders. I could also point to the sea-change that’s taken place in the industrial market. For instance, in south Hesperia a few million square feet of distribution center space are currently under construction.

That same story is playing out throughout the market, where substantial pieces of land are increasingly being occupied by users, rather than speculators.

So if you remove 1,500 acres of land from the inventory of a market where supply has been getting tighter every year, I think that’s a big deal.

I will concede that when framed as a 1,500 acre solar project the scale actually becomes hard to understand. But that’s roughly the same amount of land that would be needed to build:

• 5,000 homes

• Or, 25 million square of industrial space

• Or, 10 regional malls the size of Victoria Gardens

The Baldy Mesa solar project is just one data point in the supply trend, so in future installments of this newsletter I’ll be offering additional evidence to support the point I’m making.