Source: Bradenton (Fla.) Herald
A mere whisper of their names breeds inflation. In the world of golf course architecture, they are the three wise men: Jack Nicklaus, Tom Fazio and Robert Trent Jones Jr.
All three have their names attached to marquee golf projects under development in the Manatee-Sarasota region - evidence of the under-served wealth peppered among the population and a testament to the can't-miss appeal of local real estate investment.
The Concession. The Founders Club. The Ritz-Carlton's Members Golf Club.
Collectively, they represent more than $1 billion in top-flight golf course and residential development, and they carry the promise of pouring more fuel on an already explosive real estate market.
Golf course architects like Fazio, Nicklaus and Jones typically deliver property and home values more than 300 percent above the average in their respective markets, according to Dallas-based Golf Research Group.
"Right now, those are the three biggest names in terms of impact," said Colin Hegarty, president of the research firm that tracks all golf course development around the world and gauges their monetary impact.
Real estate driven
Both The Concession, in Manatee County just east of Lakewood Ranch, and the Founders Club, in Sarasota east of Interstate 75 off Fruitville Road, are real estate-driven developments. That's par for the course in Florida, the U.S. leader in golf-course real-estate development.
According to Golf Research Group's U.S. golf real estate report for 2004, 45.3 percent of Florida golf courses have accompanying residential real estate. At the end of 2003, the Sunshine State boasted 514 golf-course communities, more than double the amount of runner-up Texas with 218.
Florida's net present value of golf course real estate development is second only to the Pacific Coast and Arizona, according to Golf Research Group data. In the golfing world, cash is king, and the likes of Nicklaus, Fazio and Jones generate more of it than anyone.
Locally, that means high-priced real estate is both a safe investment and carries great value, said Michael Saunders, owner of Michael Saunders & Co., which sold more than $2.5 billion in high-end real estate last year.
The three projects are within a few miles of one another.
Despite Florida leading the nation in golf course development, the upper echelon of architects had bypassed the area during the recent golf boom of the 1990s. Now that they've found it, the public is likely to see dramatic increases to home values in those communities and perhaps a continuation of the clustering phenomenon that's often seen in upscale golf development, golf researcher Hegarty said.
Comparing golf to the jewelry and automotive sales industries, he said that high-end golf projects often perform better financially when grouped together.
"It's surprisingly common to see clusters like these," he said about upper-tier golf architects. "Naples has the same thing. As does Cabo San Lucas and Scottsdale, Ariz.
"For premium golf real estate, the best place is often right next to another premium golf real estate development. Clusters do seem to be how it works."
Fazio concurred, calling it a "testament to the growth of golf in that area."
Saunders said real estate surrounding the new courses is likely to appreciate at rates even higher than the blistering pace set by Manatee and Sarasota counties' real estate during the past five years.
The big three
The Nicklaus-designed Concession is a $600 million project. The 1,232-acre, 255-lot development sports lot prices up to $815,000 an acre, and home site packages priced between $1.3 million and $9 million. The golf course is about 540 acres. It is a Nicklaus Signature design in conjunction with Bradenton resident and European golfing great Tony Jacklin.
Nicklaus won 20 major golf tournaments and is considered golf's greatest player. Jacklin won the 1970 U.S. Open and the 1969 British Open.
The Concession is scheduled to open later this year.
The Jones-designed Founders Club is a $300 million project on about 700 acres. Lot prices range from $485,000 to $656,000. The Founders Club golf course opened in February.
General Manager Ian Fetigan said the Founders Club has a competitive advantage in terms of memberships and home sales over The Concession and the Ritz-Carlton project since it's the first to be open.
"There's no doubt about," he said. "We have a completed golf course and homes are going up in the community. I think obviously we have an advantage based on being finished. We're going to be attracting the same dollars."
Jones wasn't shy about his competitive fire as well, saying Nicklaus might have to concede to him this time around.
"I'm a sportsman," he said. "Jack might have to concede this one to me because this course is going to be tough to beat."
Both The Concession and the Founders Club are designed as "core golf" developments, meaning the residential portion of the projects are separate from the golf courses.
David Gould, editor of Hilton Head, S.C.-based LINKS Magazine, said the core golf designs are the new trend in golf-based communities, though developers are likely sacrificing profits to accommodate the change.
"The core golf course design trend is a little tilted toward active players," Gould said. "If you built a community and wanted to get the utmost return on investment, you would want to have the fairway view."
The Fazio-designed Ritz-Carlton Members Golf Club is a different animal entirely. With no residential real estate on the property, Ritz-Carlton officials praise the design as "uncompromised" golf and another high-class amenity for residents and visitors of the Sarasota hotel.
"Each project has its own set of goals and objectives," Fazio said. "One with real estate development clearly has a different goal than one without it. At the Ritz-Carlton Members Club, the objective is simple: the best possible golf course offering pure, uncompromised golf."
The Ritz-Carlton course is also slated for a late 2005 opening.
Larry Hirsh, a golf course ranking panelist for Golfweek Magazine, said he prefers the courses without adjacent real estate.
"To those of us who are purists as it relates to golf, we like to play in an undisturbed environment," he said.
Underserved market
Kevin Daves said developers and top golf architects recognized the gap along Florida's Gulf Coast and decided to fill it. Daves is president of Core Development, of Sarasota and Wichita, Kan., which, along with New York-based Property Market Group, is developing The Concession. Daves is also a minority owner in the Ritz-Carlton project.
Combining existing residents with the coming onslaught of retiring wealthy baby boomers, giving them something to spend money on was an easy decision, Daves said.
"They can afford the best," he said of the boomers. "And there's an awful lot of people heading to Sarasota and Bradenton.
"It really is, to me, almost an easy one but you have to be committed to doing it top-notch. They're willing to pay for it but they want a dollar value for a dollar spent."
While some analysts suggest that the golf course environment can be an alternative for those unable to find waterfront real estate, Saunders said the market demand is there for the high-end golf from people who prefer greens and fairways to sand and surf.
"They're different buyers," she said. "They want to see deer scamper through their back garden. Just like those who choose the bay. It's a matter of taste. Frolicking deer versus rolling porpoises."
Today's deep-pocketed home buyers are label conscious and are looking for a brand name like Nicklaus, Fazio or Jones, she said, and they're likely to want more.
"I think we have been underserved in the golf market up until now," she said. "Even though we have these three courses coming on at just about the same time, I still think there's room for more. I still think there's more demand."
The name game
The findings of the Golf Research Group indicate that developers and real estate investors benefit greatly from the works of recognized golf architects. For example, the top 40 architects average greens fees of $71.56 while lesser-known architect-designed courses garner $18.49. Membership sales are nearly double among the top 40, according to Golf Research Group data.
Between 1998 and 2003, Nicklaus opened 43 golf courses, Fazio opened 36 courses and Jones opened 14.
Fazio courses actually command higher initiation fees - on average more than $81,000 and a higher percentage of membership sales. Nicklaus designs carry initial fees around $76,000. Up-front membership fees at a Jones course averages about $59,000.
Between 1993 and 2003, Nicklaus, Fazio and Jones had their names attached to some of the most lucrative projects in golf. The average home price in a Nicklaus- or Fazio-designed development is about $1.2 million, though locally, no residential real estate will be available within the Fazio-designed Ritz-Carlton project.
Jones designs net average housing prices around $623,000.
"This tends to happen with high-end golf," Hegarty said. "There are places in the U.S. where you do see the three designers. There are certain markets in this country where you have areas of considerable wealth. There's a lot of money there. And that attracts big-name architects."
