Investor interest in timberland remains strong in the U.S. South, where population growth and a housing shortfall of 4–6 million homes continue to support steady demand for wood products. Timberland valuations historically move in line with inflation, and investors increasingly pursue diverse income strategies beyond biological growth, based on a report by Scott Reaves (Managing Director, Natural Resources), Don Warden (Managing Director and Co-Head, Natural Resources), and John Capriotti (Managing Director and Co-Head, Natural Resources) of Domain Timber Advisors.
Product pricing for timber in the U.S. South is expected to remain unchanged in the third quarter. However, variability could occur in specific wood baskets due to unusual weather patterns, especially if the summer proves wetter than usual. Harvesting may be limited in tracts that do not allow for wet weather access because of low-lying land and poor road infrastructure.
Smaller tracts of timberland located 45 minutes to 1.5 hours outside major city centers remain a key component of Domain’s acquisition strategy. These properties are selected based on proximity to both major and minor cities in the U.S. South, with top considerations including population growth, job growth, and access to public roads, highways, schools, and business districts. These tracts fulfill investor objectives alongside traditional timberland return drivers such as biological growth and local wood market conditions. Domain combines analysis of biological and market dynamics with rural real estate pricing and land use trends.
Revenue opportunities from the green economy and nature-based solutions remain active. These include solar power generation, carbon credit sales, and mitigation credit programs. While future legislation may affect this space, current projects that are relatively mature are proceeding. Carbon capture and storage is also advancing as technology improves the use of underground pore space for carbon containment.
No significant changes have occurred quarter over quarter in land use or investor demand, but interest continues to grow in longleaf pine ecosystems in the U.S. South. Landowners are increasingly citing wildlife benefits associated with expanding longleaf pine coverage. Several Domain-managed accounts are actively planting and promoting additional longleaf pine acreage within their holdings.
Artificial Intelligence is currently being applied in timber cruises and inventory management. Looking ahead, Domain expects broader adoption of AI in modeling growth and yield, monitoring forest health and carbon stocks, and assessing regional manufacturing demand.
