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.