Nothing attracts a builder's attention quite as much as a community that sells out early. That was the case at Pelican Sound Golf and River Club, a WCI Communities development on the banks of the Estero River in Estero, between Naples and Ft. Myers, Fla. The last of 1,299 homes in the 547-acre master planned community sold at the beginning of 2003, a full three years ahead of schedule.
WCI attributes the quick sellout to several factors, not the least of which was a unique sales strategy that bundled the cost of golf and river club memberships into the purchase of each home in the community. Product in Pelican Sound included multifamily, villa, and single-family, ranging in price from the low $120,000s to about $450,000.
“You have no initiation fee required, yet you are an equity member,” says David Fry, senior vice president and general manager of WCI's amenities group and Prudential Florida/WCI Realty. “Because it's spread across every residence, the dues rate is very reasonable—30 [percent] to 40 percent of what a typical private club would be in this market. It's very attractive to a buyer who wants access to a course and to be a member, but not something ultra high end.”
WCI had similar sales success at The Colony, a 1,200-unit development within Pelican Landing in Bonita Springs, near WCI's headquarters, that WCI programmed to sell out in five to six years. It sold out in four.
“I personally think the concept we employed at Pelican Sound—a bundled concept—is one we can continue to do well in. We just have to find the right location,” said Fry.
Facing Facts The approach at Pelican Sound is a strong example of the pricing innovations builders are using to entice new home buyers to purchase club memberships. Building the fee into the mortgage makes the purchase much more feasible for mid-level price points. The initiative may be particularly useful because of a resistance Fry says he's seen in recent months to the purchase of high-end golf memberships. In surveys, home buyers who have opted not to buy golf memberships said the decision boiled down to discretionary spending.
“[Home buyers] had a membership up North, they're only here three months of the year and they couldn't justify it. Two years ago, it wasn't an issue. And it's not just us. It's everyone in this market selling memberships over $100,000,” said Fry. “Golf in general is feeling the pain because it's a discretionary purchase. People are looking for a way to cut back.”
“Across all price points, the things that rate the highest are walking and fitness, with golf a close third or fourth,” Fry says. “Golf is becoming less and less important, although we're in a market where you need golf to compete.”
An amenities-rich lifestyle is the hallmark of WCI, which operates approximately 600 holes of golf and 1,000 boat slips as well as country club and recreational facilities.
Pelican Sound is no exception. It features 27 holes of golf designed by Chip Powell and Senior PGA Tour player Mike Hill; an 18,000-square-foot clubhouse with a full pro shop, locker rooms, and both casual and formal dining; the 6,000-square-foot River Club, a riverfront fitness center, swimming pool, and canoe launch; lighted tennis courts; private direct boating access to the Gulf of Mexico; and a beach shuttle to Lover's Key State Park on the Gulf. As a package, it features all the elements that Fry says are critical to the success of a country club community.
Designing Amenities As with every other WCI community, the amenities team was involved from the day they first looked at the property, says Tim Oak, WCI's division president for Southwest Florida. “Our success is so intertwined with each other,” Oak says. “You have to have them there.”
The team designed the community knowing from the start that the club membership and all its amenities would be bundled into the mortgage. That impacted the size of the club house and the range of amenities that would be included.
“Every department in WCI, from amenities to land development to architecture, can sit back and be proud of this,” Oak says. “Behind my desk, the one aerial I have in my office is of Pelican Sound.”
Bundling the membership into the mortgage gives residents the opportunity to experience the country club lifestyle and keep it affordable by making it part of their monthly house payment. It also works well with WCI's strategy to maximize the number of memberships at the course, which Fry says helps spread the cost for capital investment and operating expenses.
Finessing Fees But it is a dramatic departure from the normal process of achieving that goal, which has been to sell recallable non-resident memberships in the early phases of development. In that model, memberships by property owners are theirs permanently. Non-resident memberships, however, can be recalled and sold to residents if and when it's needed. Oak uses the Tiburon community as an example. The sale of nearly 150 non-resident memberships gave WCI “critical mass up front,” he says, “and allowed us to expedite construction of the clubhouse. There's a benefit to residents to have non-resident memberships.”
Like every WCI community, Pelican Sound was planned and budgeted on a capture rate (100 percent, in its case). Traditionally, clubs with higher price points have much more seasonal play and a fewer number of rounds played, Fry says. The higher the membership prices, the less rounds of golf the member plays on an annual basis. For memberships that cost more than $100,000, those members historically play no more than 50 to 60 rounds of golf a year; in the $30,000 price range, the members play as many as 100 rounds a year. Members of clubs with no annual dues or initiation fees play the most.
Fry says that daily fee courses are fine in lower-end markets; WCI's Sun City Ft. Myers course has a daily fee, and its Venetian is semi-private with a daily-fee option. Units in those communities top out at about $450,000.
At the end of the day, the success of any country club community, Fry says, is programming the right kind and amount of amenities relative to the number of units in the community and the price point.
“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 once we're out of the community. That's something I think we've done very well.”