How to Capitalize on Golf Course Redevelopment Boom

For South Florida, commercial real estate is buzzing, posting robust gains across all markets and sectors in 2018. Multifamily and residential construction is experiencing stellar growth due to a low unemployment rate, tightening vacancies and high demand for luxury properties. Unfortunately, particularly for highly populated areas and top tier markets such as Broward County, there is a dearth of available land for new properties. Developers and institutional investors have had to turn to redevelopment and repurposing as an alternative, and are looking to a surprising source of land – golf courses.

During the amateur golfing craze of the 1980s and 1990s, golf courses were overbuilt, especially in warm climates like Florida. Over the last couple of decades, however, interest has wanted greatly. With fewer casual golfers and lower memberships, municipal courses in Florida alone have lost nearly $100M combined over the past five years. Moreover, city and county-owned courses, which had initially been set up to be self-sustaining, actually required $64.9M in subsidies to stay afloat.

There are many benefits that these golf course properties have for developers. The biggest of these is the sheer space they afford. According to a report from the Golf Course Superintendent Association of America, when you include bodies of water, hard structures and out-of-play areas, courses can be anywhere from 110 to 190 acres. On a 100-acre property, for example, developers can build 300 to 400 condominiums with additional mixed-use real estate, or a limited number of single family homes. Many of these golf courses are also already located in residential areas, surrounded by other townhomes, so zoning restrictions or special compliance permits are not generally a concern.

As a result, underutilized and abandoned courses are now being shut down and redeveloped into a myriad of commercial real estate properties. Several high-end golf course redevelopment projects are currently in progress in Florida, including transformation of the 140-acre Carolina Club in Margate into a 350-unit residential community, conversion of the 130-acre White Course in Doral into a mixed-use residential-retail-office space, among many other projects.

Before jumping into a golf course renovation, developers, lenders and investors would be wise to explore environmental due diligence considerations to mitigate liability and financial risk.

Phase I Environmental Site Assessments focusing on soil and groundwater sampling of tees and greens, where most agrochemical use typically occurs, is an essential starting point. If the environmental consultant finds elevated pesticide or herbicide levels, they can recommend a Phase II Environmental Site Assessment and, if necessary, a site remediation plan. In the rare cases of extensive damage, developers can go through the Florida Department of Environmental Protection Brownfields Program to address these issues, and then resume the normal development process.

Most golf courses have irrigation wells, which must be properly closed in compliance with appropriate Water Management districts. A soil management plan can be developed by your consultant to address specifics of identified contaminants to segregate, mitigate, and monitor in the future. Consultants can also coordinate closely with contractors for construction risk management, oversight, testing, regulatory compliance and reporting, and producing a series of interim reports.

At the end of the environmental due diligence process, developers must report back to the Florida Department of Environmental Protection to confirm that remediation plans were followed and to establish formal institutional controls that are going to be monitored in the future (soil barriers or ground water use restrictions, for example). The agency may issue a site rehabilitation order, including restrictions and allowances.

Although flipping a golf course into a commercial or residential development appears simple, it’s far more complicated than you think. Attaining environmental services from an experienced, knowledgeable consultant is worth it given the size of risk, size of financial investment and the potential ROI of the land value and capacity of what can be built on the property.