By David Pearson, President David Pearson Associates
For these pros in the resort development world, the tide has already started to turn . . .
You might find it surprising that some of the best news in this molasses market comes from Puerto Rico. Jim Harvie, who’s developing the oceanfront Marbella Club condo residences next to Palmas del Mar, says sales there have been strong. The buyers are mostly professionals from San Juan, 45 minutes away. According to Harvie, “They come for a weekend, like it, and buy.” Although Harvie mostly uses the Internet for his marketing (website, lead database, and email blasts), he attributes his success to the banks and the government. “The banks are willing to give 100 percent financing for 40 years at 4.5 percent interest.” He further explains: “The government here has come up with a unique plan to encourage Puerto Ricans to buy: No property taxes for five years; no capital gains; and no taxes on any rental income.” In addition, there’s already a law in place giving tax credits to Puerto Rican residents who buy condo-hotel units to encourage the development and sales of more hotel rooms to support the tourism industry.
Other news from the “The Enchanted Island” comes from Ricardo Alvarez-Diaz, whose architectural firm -- Alvarez-Diaz+Group, PSC (ADG) -- has built everything from office highrises to single family. “Everything is scaling down,” he said. “Smaller sizes, lower costs. More multi-family than single family -- more mixed use.” “New Urbanism concepts are being used in residential development, and with building loans guaranteed by the government under the new laws there’s now a strong incentive to build.”
While distress sales have been making the news in recent months, things are picking up in the private equity funding game. Gary Rosenberg of Noble Investment Group, which deals 100 percent in the hospitality field -- as both buyer and seller -- says they have bought ten (10) properties in the last six (6) months. “Some of these have been distressed; some not,” Rosenberg said. “In many cases the owners just want to get their equity out.” His group is doing a number of deals with Hyatt, and property sales in the Florida Keys “are up 30 percent over last year.” “Hammock Beach (near St. Augustine) has had a phenomenal summer – at a very good rate,” says Rosenberg. Why? Aren’t group sales down? “But the leisure and golf business is strong,” he explained. “What attracts them initially is the product and the location, and then it’s having a good staff and providing great service.”
In the Palm Beach, FL area, attorney Paul Courtnell, a specialist in club memberships with prestigious law firm Gunster, said: “It’s mainly triage right now – fixing problems.” Since the $250,000 equity membership programs are not going exactly gangbusters, Courtnell explains, “we’re taking actions to develop new members: initiating annual memberships, limited memberships, and finally, lower initiation fees. The problem with these offers is that they often conflict with the price level of the current equity members, in which case, it becomes imperative for the members to understand that the new memberships serve to protect their investment.”
In nearby Palm Beach Gardens, high-priced residences continue to sell. “Given the economy and the international situation, we have had a surprisingly good summer,” said Connie McGinnis, who heads up sales at Old Palm, which is located at the epicentre of some of Florida’s top high-end, golf-oriented private club communities. “We are relying strongly on the internet, selecting the right places to be, and making sure our website is visited by the market we’re seeking. We also have very successful co-broker relationships, consistently making sure that this area’s top brokers are current with everything happening inside the gates.” Thanks to superior golf facilities and amenities, Old Palm is appealing to the new European “Young Turks,” some of whom have purchased homes there.
Steve Birdwell and John Munro, president and head of sales at Sea Pines Plantation on Hilton Head Island, are experiencing an upward swing in their resort occupancy. “So far,” Birdwell said, “2012 advance bookings are 28 percent higher than the same time last year. Of course that’s way off from the peak year of 2008, but it’s clearly moving forward.” What about the slump in group sales, I asked: “We’re filling in with smaller groups and individual vacationers, essentially because of our new golf marketing strategies. We have a golf-booking engine that is very effective. And what’s made a difference is the redesign of our golf packages on the website. They’re simpler now, and easier to understand.” The Sea Pines resort (400 rental villas and homes, 60 Inn rooms) was recently named one of America’s top destination resorts by Conde Nast Traveler. That’s the kind of brand exposure sure to keep the ADR and occupancy high.
The Georgia Cousins and Callaways have formed a joint venture to redevelop the resort and community at Callaway Gardens in Pine Mountain, Georgia. The team has plans for a new hotel and conference center, and is laying out single-family neighborhoods, building and selling mostly pre-retirement and retirement homes, using a green and sustainable underpinning in their marketing. Erling Speer, formerly the developer of the master-planned communities Mariner Sands and Willoughby in Martin County, Florida, is working with Jeff Quinn, formerly of Melrose and Reynolds Plantation, to use the classic one-two marketing strategy: Bring qualified guests to the resort, and provide a happy experience, then convert them into real estate sales. “We are heavily into social media,” Speer explained, “FaceBook, Twitter, Blogs etc. It is obviously much less expensive than traditional media advertising.”
Heading out West we called on Angelina Kirkpatrick, Vice President of International Sales for DMB Realty Network, a major sales and marketing company that follows the trends very carefully. “Having learned that roughly 90 percent of all homebuyers are searching online, we realized that effective website content is tantamount to success,” she said. “We have found that the three most frequently used search words are Home, Lifestyle, and Residences.” Some of the new technology Kirkpatrick’s colleagues use in marketing their clients’ properties include the virtual tour where developers are able to show their model home products electronically; a robust lead generation/management system with easy-to-harvest data; and, increasingly, YouTube, second only to Yahoo! as a search engine.
Another acolyte for social media is Mark Pazdur, Publisher of Executive Golfer Magazine, based in Newport Beach, California. “The evolving App and Social Media world will transform how we market and sell golf communities over the next decade,” he said. (Quite a comment from one who prints hundreds of thousands of magazines annually.) “We believe the App world is at the same stage as the Website world was ten years ago – but will mature much quicker.” In fact he already has his own App, called EXEC GOLFER, available through ITunes and Apple.com. With it, a golfer can research clubs and schedule a tee time to play golf at a select number of private clubs.
A professional deeply involved in the resort real estate field, direct marketing guru Jack Middlewood of California-based Walker Marketing Associates takes a more traditional approach. Walker advises that the recent focus has been on “ . . . cleaning out databases clogged with unqualified names -- helping clients to build bases with demographics that reflect people who are qualified potential buyers. “Once a good, clean list is in place, we can do very effective acquisition mailings and produce excellent results. This is the key to effective direct mail marketing.”
San Francisco-based Land Use Economics principal Greg Cory isn’t quite so sanguine as the rest of his peers. Talking about the problems the development community is having, he said, “They have been banking on the increasing wealth of the Baby Boomer, and striving to outdo each other at the high end. Now prices are off 35 to 40 percent, and most of the Boomers have already made their purchase. If they haven’t, they jumped into asset protection as they developed the retirement mentality. The Generation X folks are fewer, with different aspirations. They’re more inclined to buy the experience rather than the place at the beach.” Sounds like an opportunity waiting to happen perhaps?
In light of the recent languishing conditions, developers have turned to relatively cost-efficient electronic marketing. Virtually all (print) publications have an electronic version of their latest issue, oftentimes providing deeper coverage than the original publication. Favorable publicity, no matter what the medium, serves the singular purpose of exposure. But successful development and sales strategies do not necessarily mean rejecting traditional techniques. Referral sales are still the least expensive and most effective way to move houses and memberships; few marketing tactics can beat the effectiveness of a third-party endorsement; and, direct mail has the propensity to more specifically target a qualified prospect.
All of the professionals quoted above have seen the “light on the horizon” to varying degrees. Rather than “waiting for the renaissance” and deserting marketing altogether, developers might wish to consider scaling down from the big, high-overhead advertising firms and devising an effective marketing strategy via a trusted resource, i.e., a referral from someone on the planning/consulting team. Developing a consortium of those who have had particular experience with the marketing of destination resorts, marinas, golf courses, casinos and/or other types of developments and amenities is an appropriate approach to developing an explicit marketing plan for a specific project in both good times and bad -- and the developer doesn’t lose precious time and money educating the creative team in “Real Estate Development 101.”
Editors’ Note: Our thanks to David Pearson for his insight and efforts -- all year long. He may be reached at david@davidpearsonassociates.com or 305-798-8446. You can also visit his website at http://www.davidpearsonassociates.com
