David Fry is a golf kind of guy. As senior vice president and general manager of WCI Communities' amenities group, Fry not only enjoys the game, he also runs 18 golf courses at WCI's luxury communities. But, he laments, he hasn't played golf in more than a year. “I don't have the time,” he says. “I can't take my four young kids to the golf course. It takes five hours. We've taken up boating because it's something we can do together.”

Fry isn't alone in reassessing his time on the golf course. Golf 20/20, a golf industry consortium sponsored by the World Golf Foundation, addressed industry concerns about the recent falloff in the sport's growth in an in-depth study. The number of rounds played in the U.S. dropped 5 percent in 2003, and the number of golfers in the nation has held at about 25 million for more than three years.

The report cited weather and the foundering U.S. economy among the top reasons avid golfers are playing fewer rounds; but golfers also admitted that the time needed to play the game is an obstacle. People just don't have much time these days, and they're picky about how they spend it. They're picky about how they spend their money, too. As a result, Fry says, builders are facing mounting buyer resistance to purchasing high-end golf memberships.

“Golf in general is feeling the pain because it's a discretionary purchase,” he says. “People are looking for a way to cut back. Instead of buying a membership, they'll pay more for a daily fee.”

Those who operate golf courses cite an additional factor that is reducing the amount of play: too many other courses. If there's an upshot in the findings, it's that the majority of new courses being developed are in golf communities as opposed to stand-alone courses, a move many in the golf industry see as a healthy development.

Source: Golf 20/20 industry report (www.golf2020.com)

Belinda Sward, a managing director for the real estate consulting firm Robert Charles Lesser & Co., says she sees it a bit differently, however. She and a growing number of builders and developers are coming to the conclusion that golf courses are no longer teeing up the kind of attraction, or investment return they once did.

“There is a declining value in golf courses around the country,” she says. “They're overbuilt. The profits margins are not there. Most developers are not [recovering] the cost of the course. More and more developers are seeing that people would pay almost the same premium for marsh, open space, and trees.” As she sees it, “The big trend in active adult is not to do golf anymore. Instead, it's to do water, some type of open space, and reciprocal play with existing courses.”

Atlanta-based real estate marketing consultant Ginger Frailey agrees.

“Developers over the last six or seven years have started focusing on the fact that where 30 percent of people in a community play golf, 87 percent walk,” she says.

What is needed, says Fry, is a versatile club house facility with an attractive fitness center, among other things. That has become a much bigger component, along with swimming, dining, and those ever-popular walking trails.

“If you looked at all our resident buyer surveys, the thing across all points that rates the highest are walking and fitness, with golf a close third or fourth.”

Finding A New Path That's not to say that builders aren't putting in courses. They are, Sward says. However, the costs and risks involved in developing and operating a golf course have forced home builders to take more conservative approaches to development and look for sometimes non-traditional alternatives to the way golf courses are financed.

Sward says she's seeing a number of builders opting to sell off the courses or outsource course management to other firms. Builders are also establishing relationships with existing nearby courses to provide the experience of golfing amenities without incurring the construction or operational costs. Sunrise Colony, in a departure from its usual practice, is looking beyond the gates of its Siena development in Las Vegas to attract the majority of memberships needed to support the golf club inside the neighborhood (see “Non-Members Only,” page 48). Meanwhile, a small number of builders, including Toll Brothers and WCI, are opting to own and operate the amenities, including on-site restaurants and catering operations, staffed by executives from outside the home building sector who understand the art of operating a service business profitably (see “Country Manor,” page 34, and “Sound Strategies,” page 40).

Van Tengberg, a California attorney who works with golf course community and resort developers, says he sees a move away from private equity clubs. “Except in certain resorts, it's very difficult day to day to charge those kinds of greens fees,” he says. What he's seeing are more non-equity clubs with more activities for younger families.

“The number of golfers has shrunk,” says Tengberg. “We're losing people. The industry is trying to figure out how we keep people in the game.”

Sward's assessment: If builders are going to offer golf courses, they need to pay at least as much attention to emphasizing total fitness, particularly walking trails and activities that appeal to the entire family.

Sugarloaf Country Club in metro Atlanta, for example, has a 27-hole Tournament Players Club (TPC) course designed by golf legend Greg Norman and hosts the area's only PGA tournament. But the amenities package focuses on its TPC Family Sports Center, which includes three pools, 14 tennis courts, and a fitness center and aerobics studio. Plus, there's a children's movie theater and computer study library—and a full-time activities director to keep everyone busy.

The community is one of 15 owned by Crescent Resources LLC, the real estate development and operations arm of Duke Energy. Senior vice president Ed Weinlein says the key to the company's continued success is recognizing the intensely local nature of the business and tailoring products accordingly.

“We have everything from ultra private to daily fee to a TPC operation to get a golf tournament on the sight,” Weinlein says. “What is universally known is that today's home purchaser is multi-tasking. You have to have something for everybody. While golf takes up a good portion of our property and dollar investment, it's not the only thing in life in our communities.”

Delivering The Right Package Nothing will kill enthusiasm about a community faster than failure to deliver the amenities you've promised the home buyers, says Tom Popa, general manager of Superstition Mountain Golf and Country Club near Phoenix. They need to be well defined and executed in a timely fashion.

“Del Webb [a unit of Pulte] will go in and build a community with 30,000 to 40,000 people and build the whole thing first,” Popa says. “That breeds success more than anything else. If you can afford it, build the amenities sooner rather than later to gain acceptance and quicker sales.”

However, even successful golf community developers, such as WCI, are taking a measured approach to developing the amenities package. The critical equation, Fry says, is having the right mix and amount of amenities relative to the number of units and the price point of the community.

“The perfect community for us is one [in which] all the amenities can be self-sustained by the residents and not have to rely on non-resident users for success once we're out of the community,” Fry says. “That's perfect for us, and it really can be different dramatically from community to community.”

The mistake that Fry says he sees some developers making is overbuilding amenities on the front end so they can sell product.

“There's going to be a rude awakening when they understand the cost to operate them,” he says.

Reducing Design Conflicts Tengberg says his goal for every golf community is to make the course and the community feel like each is part of the other. The course design can't exceed the demographic the target buyers, whether they are young families, well-to-do executives, or budget-minded retirees.

“It's very important they function together,” he says. “You want people in the community to buy memberships.”

The course designer and the developer need to be on the same page, says Tengberg, because at their most basic elements, the two positions have colliding objectives.

“You'd be amazed at the tension between a golf course designer and a master plan developer,” he says. “The designer wants more space; the master planner wants the smallest course possible for the most lots. But golfers don't want to play down a fairway that looks like you're driving down a street that's green.”

Indeed they don't. And as a result, golf community design has changed significantly over the years, says Joe Bilello, dean of the College of Architecture and Planning at Ball State University.

“It used to be core golf with residences around the periphery, or you just had house to house to house lining the fairway,” says Bilello.

Today, land planners are varying densities and product mix to create a “really rich feeling about the place instead of boring ‘house, open space, house, open space, house.' ”

As an example, Bilello cites The Pinehills, a 3,000-acre development with two courses that is located 45 minutes from Boston and that has won the prestigious Nationals for Best Master Planned Community. Small neighborhood enclaves are tied to a town center with retail shopping, dining, a library, a post office, and office space. Narrow street design keeps driving speeds low.

Weinlein says he understands that scenario perfectly. They work, he says, because they help people feel connected to the community and to each other.

“There are golf nuts out there, people that it's their only focus,” he says. “But long before I did golf courses, I was a community developer. I learned that it's all about making and having opportunities that appeal to the masses but are singular in the way they're looked at by a purchaser. People who love to live in communities love to commune with people. That's what makes it all go around.”

Adapting To The Times The “greet street” days are giving way to keeping houses away from the courses to enhance the golf experience and increase the price point for all the lots. WCI's Old Palm Golf Club in Palm Beach Gardens, Fla., is one of its first in which golf is driving the land plan.

“We were targeting the high-end avid golfer,” Fry says. “We knew the golf had to be premium. It was more important than having a lot of real estate loaded on the golf course.”

Regardless of the quality of the golf, a golf community is just like any other product, Weinlein says. It needs to be constantly re-evaluated and upgraded to make it attractive to new segments of the buying public.

“We had a Greg Norman course and a tournament,” Weinlein says. “He was the No. 1 golfer in the world. What are we going to be five years from now?”

They opted to build a family sports center with tennis courts and an interactive pool. “That's when we really exploded on the scene,” Weinlein says. “Even though the homes were in the super-luxurious price range, we attracted families. It wasn't just about golf. It's something for everyone. We chose the right time to emphasize the golf, then also put it in its proper place as it continues to be used and refocused.”

Crescent Resources is doing “more and more things to involve families around golf” for shorter time spans, Weinlein says.

“It doesn't have to be an 18-hole round,” he says. “You have to adapt. The solitude of the game is still part of the mystique, but it becomes a double-edged sword. To make it more growth oriented, it has to have specialty situations to get little snippets of it so you're intoxicated by it.”