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Another Bubble Balloons on Napa Valley's Pritchard Hill

The $55 million asking price for Montagna's 80 acres could push vineyard prices to new highs
Photo by: Michael Jacobson
Montagna's 32 acres of vines may set a new standard for Pritchard Hill vineyard value.

Posted: May 29, 2015 5:00pm ET

At times one senses a real-estate bubble building in wine country. The price for prime vineyard land continues to escalate in Napa's and Sonoma's choicest AVAs.

In Napa, people were wowed by sales in the $250,000- to $350,000-an-acre range for Rutherford vines a few years ago. Those properties might turn out to be bargains in light of the latest offering from the "Rodeo Drive of Napa Valley," Pritchard Hill.

Montagna, the 80-acre property on Pritchard Hill owned by Bob Long, with 32 acres planted to Cabernet Sauvignon, just went on the market. Asking price: $55 million.

The property also includes more than 20,000 feet of caves, a generous 50,000-gallon winery permit, hospitality areas and a gorgeous potential home site. Not quite turnkey, but close.

The fact that the vineyard is already planted and the property already has a winery permit are big plusses. Just getting the permits to plant a vineyard and build a winery can take years. It’s why some vintners are willing to develop properties without permits and pay the fine. Jayson Woodbridge went that route with Hundred Acre in St. Helena. He ended up paying just $1,000 in fines (but hundreds of thousands in lawyer fees).

Sizing up the value of a vineyard is difficult because each is essentially a one-of-a-kind property. It’s the reason people often compare vineyards to fine art. But Pritchard Hill is indeed a special neighborhood. This is an area Colgin, Bryant Family, Chappellet, Continuum, David Arthur and Ovid call home. These famed labels use grapes grown in the hill’s rocky soil and unique microclimate to produce wines that command premium prices.

There are an estimated fewer than 350 total vine acres on Pritchard Hill, so whoever buys the Montagna parcel will own close to 10 percent of the hill's vines.

Coldwell Banker agent Jim Keller, who is representing the Montagna property, brokered a 2010 deal for Pritchard Hill's Houyi Vineyard, now the site of Nine Suns winery, that amounted to $750,000 per vine acre. He estimates vineyard land on Pritchard Hill is now worth nearly $1 million an acre.

At a yield of 2 tons per acre (which would be a little high for the area) and about 60 cases of wine made per ton, gross annual revenue for a $500 Cabernet (the price for the most recent Colgin releases) would amount to about $720,000 an acre, or about $23 million for the 32 acres of vines presently up for sale. Of course, there's also the cost of building a winery and all the expenses that come along with running it to consider. And then there's the uncertainty of terroir: Pritchard Hill has a very fine reputation, but can this particular plot of land produce extraordinary wine?

Keller, who just listed the property a week ago, says interest is extremely strong, and he's already shown it to three interested parties. There isn’t much land like this left on Pritchard Hill. Someone will pay the price, and that’s the kind of precedent that will only cause prices elsewhere to balloon.

Jeff Ames
Napa, Ca —  May 30, 2015 10:38am ET
Reality is that someone will buy it. It is very expensive but getting that much land on Pritchard Hill that is plantable- much less already planted- is just not going to come around any longer unless a winery decides to sell.
The winery permit is also of enormous value in time saved. That means that the buyer can produce around 21,000 cases of wine and with 20,000 feet of caves they can do it all on site. With the potential production of about 4-5000 cases it can be kept all single high with focus on total quality (which I would imagine any buyer who has the pockets to buy that would demand).
There are enough people out there now looking to invest and to who $55 million is affordable. They will find a buyer.
John Eagan
Beverly Hills  —  May 30, 2015 1:35pm ET
Those that love this AVA need to know the name Melanson; the estate bottles their own wine Melanson (Matthew's Block) and there will be a 2013 Tor Melanson Vineyard. If you enjoy the neighbors like Colgin, you should get to know these names. I may be biased - I own a lot of Tor and Melanson!

Cheers,

Jay Eagan
Robert Lapolla
san diego —  June 1, 2015 3:58am ET
There a sucker born every minute. perfect for an NFL, MLB or NBA multimillionaire.

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