Horse Heaven Vineyard Goes to Gavel

Nearly 700 acres to be auctioned in one of Washington's most expensive grapegrowing neighborhoods

by Peter Mitham
Horse Heaven Hills AVA
Prosser, Wash. -- A property owner in Washington state plans to offer approximately 680 acres in the Horse Heaven Hills AVA at an auction Nov. 6. J.P. King Auction Co. of Gadsden, Ala., is handling the sale, which includes the 220-acre Alder Creek Vineyard (aldercreekvineyard.com) and the 460-acre Windy Ridge Vineyard (windyridgevineyard.com). The properties have been subdivided into 19 smaller parcels ranging in size from 20 to 80 acres.

Auction documents state that up to 445 acres of vineyard are possible on the properties near Mabton, Wash., which currently have just 265 acres of vines. Varieties planted include Cabernet Sauvignon, Merlot, Syrah, Cabernet Franc, Petit Verdot, Malbec, Sangiovese and Sauvignon Blanc. Approximately 45 wineries from across the Pacific Northwest and as far away as Nebraska buy the fruit from these parcels.


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Horse Heaven Hills AVA
Selling to reduce debt

Despite strong demand for the grapes, managing owner David Groth told Wines & Vines that he's selling the properties to reduce debt and fund a planned conference and retreat center adjacent to the Groths' Canyon's Edge Winery (canyonsedgewinery.com). Changes in financing conditions since Groth began planning for the project last year mean a greater requirement for up-front capital.

The $10-million project will include meeting facilities, approximately 12 cabins and a custom-crush facility serving local growers. As a model, Groth points to the Wine Loft in Prosser, where seven different wineries operate with individual tasting rooms but use common equipment.

"It gets a person into it, and the lifestyle, for far less than what it would take them to go out and spend $1 million on their own to go and set up a facility," Groth said.

Groth himself will retain 700 acres following the sale, providing enough land for approximately 100 acres of vines to supply Canyon's Edge, as well as up to 200 acres of production for other wineries. "I've got contracts coming out my ears for the fruit. And, in fact, I could have planted another 400 acres this year just to try to meet the contracts," he said.

Several of Groth's current purchasers have requested information on buying parcels Nov. 6, given the rarity of the offering and the desire to secure a supply of grapes from the area. "We have a reputation of very high-quality fruit coming out of here," Groth said. "They want a site, they want to buy into it so they can…continue to have fruit from here."

Horse Heaven Hills AVA
Demand for local grapes is strong

The Horse Heaven Hills AVA was established in 2005, but the wine industry's roots in the area go back to the early 1970s. Horse Heaven vineyards supply about 30 percent of Washington state's grapes, including some of the most expensive lots. Consistent weather ensures that hang times are longer than in areas such as Walla Walla. Alder Creek, for example, hasn't yet had frost, which touched vineyards in Walla Walla earlier this month.

Demand for the area's fruit is matched by interest in vineyard land. Leucadia National Corp., owner of the Crimson Wine Group, which has properties in Napa and the Willamette Valley, bought 611 acres in the Horse Heaven Hills in 2005 and 2006. The $3.3 million price averages out to about $5,400 an acre, a figure that may seem low but represents the aggregate value of bare land not all of which will become vineyard.

The highest price paid for a vineyard in the AVA -- and one of the highest in Washington state, for that matter -- was set when a group led by Allen Shoup of Long Shadows Vintners in Walla Walla bought Wallula Vineyards from the den Hoed family earlier this year. Shoup's group paid just under $50,000 an acre for the 650-acre property on the eastern edge of the AVA.

With a piece near the Champoux vineyard selling for $44,500 an acre last year, Groth expects to see good bids on his parcels. Brokers such as Don McDermott of John L. Scott Real Estate in the Columbia Gorge (also a vineyard owner) are pegging current prices of planted vineyards at $30,000 an acre and bare land at $10,000 an acre. Still, while agricultural properties have been holding their own despite a general downturn in real estate, J.P. King president Craig King notes that the auction won't be a cakewalk. Smaller parcels promise to open up the bidding to more buyers, however.

"We wanted to offer some smaller parcels where maybe someone wants to come in and they want to buy 50 acres and operate a smaller vineyard without taking on the entire project," King said. "There are plenty of buyers who can absorb and buy this entire property, but there are a whole lot more buyers who can buy a part of it."

Broadening the market will not only help attract more bidders, King said, it promises to boost the value of the property to Groth because proceeds from the sale of individual parcels is likely to be more than a single, large property would fetch. That also stands to protect Groth from any downturn in real estate values.

"We're better because we broaden the market," King said. "In today's market, we're having to be more creative in order to get the same prices that we were getting a year or two years ago."

Viewings of the property start Oct. 27 and continue through Nov. 6.
Posted on 10.24.2008 - 08:14:34 PST
Interesting article, with two gross inaccuracies. The Red Mountain AVA, est. in 2001, has the most expensive vineyard land in Washington State. The sale last year of Red Mt. Vineyard/Sandhill for about $73,000/planted acre far exceeds that in your article.
Benton City, WA USA

Posted on 10.24.2008 - 20:30:54 PST
Didn't Sandhill's sale include a winery? If so, it would throw off the cost per acre Tom quoted.
Renton, WA USA

Posted on 10.24.2008 - 08:54:50 PST
Tom: Thanks for the heads up. We are double-checking and will make any corrections needed.
Jim Gordon
Napa, CA USA

Posted on 10.24.2008 - 12:45:52 PST
Thanks for the comment, Tom. Tracking vineyard sales, many of which are private, isn't easy. Many parties prefer to keep prices and terms quiet. Red Mountain is a desireable AVA but in researching this item, Sandhill did not feature in any of the published sources I consulted or during interviews -- so your information is welcome. I'll be taking a closer look at vineyard sales in Washington State for a future article, and would appreciate hearing what readers in the state's various AVAs are hearing, and seeing. Those who wish to share information for that purpose can contact me at pmitham(at)telus.net.
Peter Mitham
Vancouver, BC Canada