Last year’s U.S. private timberland investments look likely to overtake their previous year’s performance. As we await full-year reporting inclusive of annual valuations through appraisals or market transactions, this performance could offer an indication of what to expect for 2025.
U.S. timberland performance through Q3 2024 reveals strong capital appreciation driving 2024’s year-to-date total return ahead of the same period in 2023, with its 5.41% year-to-date total return of 55 basis points (bps) above the same period last year.1 Appreciation is driving performance so far in 2024 (3.96%), running ahead of 2023 (2.93%).
An active timberland transaction year offers appraisers a deep comparable sale database for benchmarking property valuations. However, timberland revenue compressed in 2024 as wood products demand continued to soften, resulting in a wave of capacity reductions across most regions within the United States that weighed on timber harvest volumes and prices. Year-to-date returns reveal that timberland managers are addressing the current weakness in demand for forest products, such as lumber, panels, pulp, and paper, by maintaining flexibility in their harvest decisions in anticipation of stronger markets ahead.
Reviewing 2023’s U.S. timberland performance in a historical context across key U.S. timberland regions provides an informative backdrop in anticipation of 2024’s full year of benchmark performance, which will be released in a few months.
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