Charting a new course in Bahamas, Florida
David Southworth has weathered three recessions running a Massachusetts-based real estate development company that bears his name, the most recent economic collapse being what he calls “by far the worst because it’s lasted so long.” Along the way, however, he has developed a credo that’s sort of his real estate equivalent of Wall Street’s “buy low, sell high” mantra.
“When people aren’t developing, you should start to develop,” Southworth said at the PGA Merchandise Show last month. “When people are, you should stop.”
So it is that this month Southworth Development will begin full construction on PGA Village – The Bahamas on Cat Island, at a time when most developers remain in hibernation. Since the project was announced in August 2008, some initial infrastructure work has been done, but Southworth plans to crank up the building crews with the goal of opening the Rees Jones-designed course and some of the housing by summer 2012. Of the timing, Southworth said with no hint of irony, “I think it’s perfect.”
He’s not alone. The Mosaic Co. is diving headfirst into the resort business with a 16,000-acre project, called Streamsong Resort, on reclaimed mining land south of Lakeland, Fla. It figures to be the largest domestic golf development on tap, with two courses – one by Tom Doak, the other by Bill Coore and Ben Crenshaw – scheduled to open in October 2012.
Doak, via e-mail, called the sandy site “one of the best I’ve ever worked with,” adding that the terrain has unusual variety by Florida’s standards.
Mosaic, which had revenues of $10.3 billion and net earnings of $2.35 billion in 2009, eventually plans to spend more than $80 million on the project, which will include golf villas, a lodge, spa and other amenities. (Mosaic is using about $17 million in Recovery Zone Facility Bonds, which by federal law cannot be used on the golf courses.) Mosaic is betting that Streamsong, between the Orlando and Tampa airports, will be a project that will be “visited by people from all over the United States,” said Rich Mack, the company’s executive vice president.
“Florida does not need two new golf courses. We understand that,” Mack said. “However, we have the perspective that the United States can add truly special and unique golf courses.”
As Mack suggests, what makes these projects noteworthy is that they’re so rare these days.
Industry analyst Jim Koppenhaver, president of Pellucid Corp., makes the case that “we need to get rid of 10 percent” of golf courses. But while course closures have outpaced openings for the past five years, Koppenhaver characterized the correction as “too little, too slow.”
In fact, the pace actually slowed in 2010, when a net of 61 18-hole courses closed.
“It just amazes me how many courses are going to foreclosure and the banks are holding them and operating them,” Koppenhaver said. “(There’s) fundamentally nothing in this current cycle that suggests it’s going to get a lot better quickly. I don’t know whether the banks are going to take a snowman (on their loans), but they’re not going to make a par.”
It’s against this backdrop and the broader economic doldrums that Mosaic and Southworth are pushing forward with their ambitious projects. Southworth’s long-term plans call for 2,000 residential units spread across 1,900 acres. But he’s not operating in a vacuum; a second course has been mapped out and seems necessary to create a true destination, but he’s not ready to pull the trigger.
“I think it’s important to stay disciplined and make sure that the course goes in as the community grows,” he said.