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September 2021

Golf Course Real Estate Market

State of the Market

By Scott Kauffman

Since the start of the U.S. course development boom in the early 1980s, Florida perennially ranks No. 1 in the country for most facilities.

Nearly 20 years later, Florida remains the top state with 970 at year-end 2020, approximately 15% more facilities compared with runner-up California (825), according to the National Golf Foundation’s latest “Golf Facilities in the U.S.” study. Nationwide, the 2021 NGF data now show 14,145 total facilities.

Besides being known as golf capital of the world, Florida also serves as the consummate case study for the downsizing dynamics continuing to play out on a national course supply level.

For instance, nearly 20% of the courses that opened last year took place in Florida: Lakewood National Golf Club and Esplanade at Azario in Lakewood Ranch, Fla. Yet, in one week alone last summer, Seminole County officials near Orlando agreed to move forward with purchasing Deer Run Country Club and Wekiva Golf Club for $14.8 million and keeping the daily-fee properties closed as future public parks for the surrounding communities.

Meanwhile, the future of two other closed Orlando-area golf properties – Legends Golf Club and Stoneybrook West – remained in limbo last summer with reports that respective homeowners associations were trying to buy the foreclosed 18-hole layouts.

Indeed, for every 10.5 U.S. courses that opened last year in America, according to the 2021 NGF report, nearly 10 times as many were shut down, reducing the total number of U.S. facilities measured in 18-hole equivalents (18HEQ) to 13,355. Of course, this now marks a 15-year trend of annual net decline in U.S. course supply dating to 1986.

In all, the golf industry has now seen 1,645 courses disappear from the golf radar, or a net reduction of 11 percent from the peak supply recorded in 2006 as measured in 18-hole equivalents (HEQs). To be sure, the net decline of 176 HEQs in the  last year was an approximately 28.5 percent drop from the previous year’s 246 net closures, the largest drop on record.

So that begs the question: Is the ongoing rate of golf supply attrition coming to an end? Not so soon, if you ask longtime Orlando-area course owner and Scottish PGA Professional Kenny Nairn.

“I’d say we have another 3-5 years of this,” says Nairn, who owns 27-hole King’s Ridge Golf Club located across the street from shuttered Legends in Clermont, Fla., as well as Eagle Creek on the other side of Orlando. “Orlando took a big hit (of course closings in recent years) and again, it wasn’t a bad thing. It was a good thing.

“There’s still a few more that need to be put to bed. But since the pandemic, the demand is back. And there’s other courses that have just been taking the money during this resurgence and not putting it back into the property and equipment like we’ve been doing. And you know that’s going to come back and bite you. But right now, the demand is there. When the demand subsides, that’s when it’s going to crash again.”

 

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