What Buyers Want:  Supermarket or extra golf course?

    As a city boy –- born in The Bronx, NY, raised within 30 minutes of Newark, NJ, and never lived more than a couple of hours from a major city –- I'm inclined to ask customers looking for a golf community home how far they want to be from urban-associated conveniences like major airports, shopping malls, universities, museums, and even professional sports teams.  About half don’t mind being an hour away, as if the major point of retirement –- as well as vacation time -– is to avoid traffic.  As a former New York City commuter, I am strongly sympathetic to that notion, yet there are tradeoffs when you choose a remotely located golf community.  My own vacation home in South Carolina, for example, an hour from the great city of Charleston (and an additional hour for the return trip), is about a half hour too far away for my own comfort.  But it is fine for now since my wife and I use the home less than three months a year; if we decide to live there full-time, our enthusiasm might erode.

Remote communities count on the inside game
     Remotely located golf communities that have tried to attract retirees have struggled disproportionately during the housing recession.  Large, out-there golf communities, like some of The Cliffs Communities and Reynolds Plantation, began straining financially even before the Lehman Brothers crash of September 2008.  Part of the problem certainly was management’s false sense that the housing market would continue up, up and away forever, and that they could charge $1 million for a nice patch of mountain property to compensate for the extreme investment they made in a full roster of amenities, such as wellness centers, plush clubhouses and impeccable designer golf.  The amenities load not only was an attempt to justify the high price tags for land, homes and fees, but also to compensate for the reality that, at most of these locations, there just wasn’t much to do outside the gates.
     “It is a stunningly gorgeous place, with tremendous golf courses and other amenities,” one of my customers wrote me after a visit two years ago to Reynolds Plantation, more than 90 minutes from central Atlanta. “But there is nothing to do outside the community.”  
    This couple will soon build a home on a golf course lot they purchased at Governors Club in Chapel Hill, NC, with 27-holes of Jack Nicklaus golf but, more important, a vibrant university town about 10 minutes away (and a Whole Foods supermarket even closer).  It may not be a coincidence that the most successful Cliffs developments in terms of sales have been the Cliffs at Glassy and Cliffs Valley, 48 and 30 minutes from Greenville, respectively, and Walnut Cove, just 10 miles from Asheville.  (Glassy and Valley opened earlier than the other Cliffs communities but, still, did not have to overcome the proximity issues.)  The more remote Cliffs communities in the Lake Keowee area seem to appeal largely to second-home owners, many from the Atlanta area, nearly three hours away.

Make the world go away
    A managing partner at the fine community of Uwharrie Point, on Badin Lake in North Carolina, took me to task a couple of years ago for an article I wrote that referenced Uwharrie’s distance from life’s important conveniences.
     “…our location is a significant asset,” he wrote of the community that is 25 minutes from the town of Albermarle, population 15,000, and 75 minutes from Charlotte.  “…we have always seen our primary market as those looking to get away from something…rather than looking to find something.”  
    I thought at the time this was a massive misunderstanding of the baby boomer generation’s search for an active and entertaining retirement.  I still believe that; the dozens of customers who have filled out my questionnaire about their requirements for a golf home are definitely looking to find a particular lifestyle that suits them.  (They never volunteer that they are looking to avoid traffic or any other urban inconveniences.)  However, I do think Uwharrie’s developer may have spoken for his fellow developers in pitching remoteness as an asset and the amenities inside the gate as enough to make the rest of the world go away.  And, frankly, for some golf community residents, especially vacation-home owners, a relaxing environment far from the hustle and bustle of “normal” life is indeed an asset.  But active retirees who choose to live full-time in a remote community run the risk of growing weary of driving 90 minutes round-trip to a good restaurant or two hours to a museum.

How do you keep ‘em down on the farm…?
     In order to overcome the natural disinclination for life at long distances from some of the bare necessities of life, like supermarkets, hospitals and, some would say, a movie theater, remote golf communities typically spend extra on marketing campaigns to convince potential buyers that they really won’t need to leave the plantation, that there is plenty to do on site.  This rationale demands relentless marketing; yet, the first thing most businesses do during a downturn is to cut expenses, and none are more discretionary than marketing expenses. (I spent 30 years in corporate communication, and whenever sales and profits went soft, the CFO looked first to eviscerate the advertising and marketing budgets.)  That reaction may make sense for well-established businesses with products that have great brand recognition and few noteworthy competitors…
    …but The Cliffs Communities, Reynolds Plantation, Haig Point on Daufuskie Island, SC, which is reached by the community's own scheduled ferry service only, and remotely located developments like them have plenty of competition in the southeast and face higher hurdles in convincing sophisticated potential buyers to put down roots 20 minutes from a supermarket and two-hours round-trip from a decent selection of urban restaurants.  Back in the heady days of the early 2000s, The Cliffs spent $14 million annually on marketing to convince its target audience that, in a few of its communities, access to six golf courses, deluxe wellness centers and a roster of other lush amenities compensated for the 45 minutes or longer drive to Greenville.  The promise of a Tiger Woods golf course, and an appearance or two by Tiger himself, was part of The Cliffs’ mid-2000s strategy to make people forget that the site of the Woods golf course, High Carolina in the North Carolina mountain town of Swannanoa, was miles from anywhere.  (See current homes for sale in The Cliffs' Greenville, SC, area communities.)

Chicken and Egg:  Extra golf course or supermarket?
     The Tiger Woods golf course, which would be the eighth in the Cliffs portfolio, may or may not be completed eventually; The Cliffs’ new owners aren’t saying anything publicly but the volume of sales of properties at High Carolina will likely determine the golf course's fate.  (Note:  The new owners of The Cliffs are following through on original developer Jim Anthony's commitment to the Gary Player golf course at Mountain Park; it should be ready for play in 2013.)  In retrospect, Mr. Anthony might have used the reported $15 to $20 million he paid the unproven architect Mr. Woods to help finance the construction of a supermarket, small mall and other conveniences just outside the gates of the community. (Developers, of course, may consider such a suggestion a golf blogger’s madness; without any embedded local population, they’d argue, who would patronize the mall?  All true, but which is chicken and which is egg, the people or the conveniences that could very well attract the people?)
    Most golf communities that skated through the housing disaster unscathed seem to share one trait in common –- they are within easy driving distance of cities.  For example, Brunswick Forest in Leland, NC, is just 10 minutes from the vibrant and healthy city of Wilmington.  During the recession, Brunswick Forest has welcomed 900 new owners to the community since 2007, the best sales record in the east over that time except for the mammoth Villages in central Florida.  It is interesting that Brunswick Forest, coincident with its initial sales efforts, saw fit to announce a mall would be built at its entrance, even though a fair amount of shopping is less than three minutes up Highway 17.  The mall, including a bank and medical offices, opened a few years ago.  (See current golf homes for sale at Brunswick Forest.)

     The Landings on Skidaway Island, a huge 30-year old development, has long since paid for its amenities, but its six golf clubs faced some challenges during the recession as its residents, some on fixed, if ample, incomes, sought to cut discretionary expenses.  But The Landings was able to continue to sell homes, most of them resales, because prices dropped significantly and potential buyers sought the convenience of a city -- in this case Savannah -- just 20 minutes from The Landings' front gates.  (Current golf homes for sale at The Landings.)
     It will be interesting to see in the coming months and years if big, highly amenitized remote communities turn their attention almost fully to potential vacation homeowners whose need for outside-the-gates conveniences is less important than they are for year-round residents.  Those developers who continue to focus on attracting full-time residents to communities an hour or more from a city had better be prepared to pump up their marketing budgets in order to persuade potential full-time homeowners that what is inside the gates more than makes up for what’s not outside.