Parker Associates Blog

Connestee Falls is a beautiful mountain community with lakes and forested hills on 3,900 acres surrounding a championship golf course and other amenities adjacent to a large clubhouse just outside the college town of Brevard, North Carolina. Since its founding in 1970, it has attracted 1,650 property owners of whom 1,315 have built homes on the property and over 40 percent of the homeowners live there year-round. They love all of the seasons. But over 600 lots remain vacant.

The Connestee Falls Property Owners Association, which owns all of the common land and amenities, as well as several hundred vacant lots, conducted a survey of owners in 2010 to which 60 percent of the property owner households responded with enthusiastic praise for their community and a desire to keep it in its natural state and informal community activities. However, they did support the goal of adding more members by marketing the remainder of their vacant lots and sharing their mountain paradise with more households.

Thus, in March 2012, after a lengthy search for professional assistance, the POA retained the Real Estate Marketing Alliance of Jacksonville, Florida to prepare a Strategic Marketing Plan for sellout of the vacant lots and resale of available existing homes in the community. Real Estate Marketing Alliance (REMA) is a combination of principals from Parker Associates, the 30-year-old development/marketing consultant firm, with RedDot Marketing specializing in applied marketing, PTC Computer Solutions, an expert in systems design and website creation, and the economics and finance skills of Monocle LLC in Chapel Hill, North Carolina. REMA was organized in 2009 to encompass all of the expertise required to create successful solutions to marketing new and existing communities in the post-recession recovery.. The four REMA principals concentrating on the Strategic marketing Plan for Connestee Falls combine their innovative expertise and experience extending from market research and accurate positioning through branding/advertising/public relations to websites and information systems for successful consumer attraction and sales conversion — an efficient and knowledgeable team coordinated toward the singular goal of achieving new residents for Connestee Falls.

The process of creating the Strategic Marketing Plan and ensuring its coordination with the majority opinions of property owners is well underway with consumer and competition research producing information to guide specific action programs. Results will be reported over coming months and years.

In the interim, the resident property owners are preparing to enjoy another wonderful summer season in their comfortable mountain environment, secure in the knowledge that their new team of experts are planning to introduce more compatible neighbors into their midst to share their fun and expenses of maintaining their relaxed mountain lifestyle.
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Professional appraisers list three methods of estimating land value. The first, and most commonly used method, is to use comparable property sales (entitled for the same land use) in the same geographic area and reduce them to price-per-acre as a common denominator for application to the subject property. This method has the advantage of actual market response to value, but it has the disadvantage of defining comparability (i.e., small retail sites on major roads may have much higher prices-per-acre than a larger retail site either on the same road or elsewhere. It also has the disadvantage of time of sale; for example, a comparable sale one year old may precede an upturn (or downturn) in demand and consequent increase in value for this type of land. Thus, the judgment of the analyst may be applied to increase or decrease the comparable value and consequent land price.

A second method of estimating land value involves the cost of improvements on the property, particularly buildings. This cost approach is not applicable to unimproved property.

A third method of estimating land value is to project improvements to the land (infrastructure, buildings, etc.) and subsequent lease or sale of the improved property. Land value is then estimated by historic ratios of raw land to total property sales value.

During the Great Recession of 2007-09, land values declined rapidly with the result that appraisers were faced with the dilemma of outdated or no property sales upon which to base comparable sales. Many innovations were introduced, including a simple judgment caveat at the end of an appraisal stating a recommended reduction in value in percentage terms. Although such appraisals simply passed the issue of value to the buyer for an offering, the normal methods of valuation could not be relied upon in a rapidly changing market.

Although Parker Associates has always researched comparable property sales for back-up guidelines, we rely primarily upon future planned improvements to the property for more definitive estimates of present value. The issue of future value is much more persuasive than historic comparable property values, but it still relies upon professional judgment to establish discount rates for estimating present value. We often provide two or more discount rates to allow the buyer or developer to achieve a realistic risk factor in establishing a purchase price.

In sum, regardless of the methodology employed, land valuation always involves the professional judgment of the analyst conducting the valuation. This fact has been particularly clear during the Great Recession downturn as well as the recovery period. Historic data has been an unreliable guideline and future development pricing must be adapted to cost as well as long-term economic trends in order to identify discount rates that allow for feasible development risk factors. Land values continue to be subject to group decision-making.

LAND QUEST
A Novel of New Communities Development in Florida

By David Forster Parker, March 2012

SUMMARY

Canadian billionaire builder-developer, Nash Logan, recruits retired Florida urban planner, Dr. Mark Wilkins, to guide him and his Logan Homes team in selecting an ideal site for their proposed innovative new community in Florida.
Wilkins defines a creative fast-track program to introduce Logan and his colleagues to all parts of Florida and its often-uncontrolled land development history, as well as suitable locations for a potential new community. The program is scheduled over two weeks in March 2010, using the Logan Homes’ helicopter and mega-yacht for transport and lodging.
However, Wilkins’ fast-track orientation program does not anticipate the aggressive actions of Florida criminal elements in pursuing an investment share of the new community, a plot that causes the death of one Logan Homes’ employee and threatens the lives of all the team members in adventures that involve both federal and state law enforcement agencies.
Despite serious injuries to both Logan and Wilkins, they succeed in completing the statewide review of new community development as the basis for selecting the best site for Logan Homes’ proposed new community.

About the Author
David Forster Parker has been employed in 17 countries as a homebuilder, new community planner and development executive, teacher, consultant and author of dozens of articles and books, both non-fiction and fiction. All of his writings are based upon his career in urban development and marketing real estate. He was born and raised in Sarnia, Ontario, Canada, after which he received B.Sc (HH) and MUP degrees from Michigan State University and a doctoral degree in public administration from the State University of New York at Albany. He lives with his wife Marilynn in Florida and can be contacted at david@parkerassociates.com.

Order a Copy
Although this book will appear on Amazon.Com later this year, readers of this Blog can order an advance copy mailed to their address for the total price of $25.00 including postage. Please send your check to PTC Communications, P.O. Box ___, Jacksonville, FL 32250 and enclose your mailing address. An autographed copy will be mailed to you as soon as author printing is complete this Spring.

Over the past few years, many writers have confused urban development sprawl with population density – the lower the density, the greater the sprawl. Others have simply used sprawl to describe any type of urban development they personally find distasteful. The word has become a cliché for a wide variety of urban conditions without specific definition.
Webster’s Dictionary describes sprawl as “to spread or develop irregularly” — a definition that applies to a great many urban areas at any density. The linear blight caused by major city streets suffering from unregulated peripheral development, both old and new, is likely to be accepted by most observers as fitting the negative image of sprawl. On the other hand, a pleasantly wooded subdivision of well-maintained homes and lawns does not deserve the same designation just because of its low density. Yet, the latter often is classified by this negative term simply because it is part of a low-density suburb that generates traffic to employment, schools and shopping centers.
Few urban planners would argue with the public efficiency of servicing urban areas of high-density in comparison with suburban areas of low-density. And fewer still would argue with the private efficiency of living in a neighborhood sufficiently dense to support shops and other facilities within walking distance. And a significant segment of our society (recent estimates suggest about one-third) appear to prefer to live in these more efficient higher-density neighborhoods. But an even larger segment appear to prefer lower-density housing locations, despite the annoyance of higher utility costs and the inconvenience of longer travel distances to support facilities. And, of course, an unfortunate minority has very little choice in living environment because of limited resources (and we have both high-density city slums as well as low-density rural slums).
“These are choices open to a majority of Americans. Public planners and other officials are free to influence persons to select more efficient lifestyle locations. And they can also attempt to influence developers to build more dense neighborhoods and housing. But they are not charged with regulating such decisions except as specifically defined in public legislation (and minimum density is seldom included in legislation, only maximum density).
“Therefore, whereas the term sprawl is a negative term for “irregular” development, planners and politicians should refrain from using it generically to describe urban growth that is equated to lower density. Higher rather than lower density does not equate to good and bad. It does equate to more efficient services and walking distances, but the value of these elements is judgmental for most persons. Americans will select the types of living environments they prefer, regardless of definitional inconsistencies from advocates of higher density environments.
Land developers and home builders, like politicians, often claim to know what Americans want, and they proceed to try and guide public opinion by their interpretation. We will see many unfinished developments in Florida developed on that premise, which leave behind committed land that is not used for anything, but reserved for a use that will never occur. At present, we have excellent and economic means of finding out what people really want. We do not need to rely upon one man’s or one company’s intuition. In sum, we can only hope that future urban developers will conduct continuing consumer research on needs and preferences as an integral part of the planning process.

Excerpt from David F. Parker’s new novel, “Searching For Innovation,” that describes a progressive urban developer’s hunt throughout Florida for the optimum site to develop his concept for a state-of-the-art new community. The two-week helicopter tour highlights the inefficient historic land development errors that defy correction in many parts of Florida.

Revitalization for Aging Retirement Communities

Improvements in health care and personal hygiene continue to extend the active lives of growing numbers of Americans.  However, in many cases, no parallel attention has been addressed to the dwellings and communities that constitute their primary living environments.  Recently, Parker Associates has been requested to examine the environments of several mature retirement communities with the objective of revitalizing them for attraction to replacement retirees.  Some key findings and conclusions are summarized in this blog.

Background

Despite the continuing impact of the Great Recession, exacerbated by negative effects of the European banking crisis, home sales are slowly expanding throughout the United States.  Households of all age groups are searching for initial or replacement dwellings, and a growing number are showing renewed interest in vacation and retirement homes.  Most markets are experiencing growing housing demand — but not all.  Included in those neighborhoods experiencing too few potential buyers compared to sellers are amenitized retirement communities developed during the surge of buyers in the 1970s and 80s.  For a variety of reasons, many never fully achieved completion or were adequately maintained.  Now in the new millenium, with New Age consumers, these older communities no longer exhibit the same appeal as they did for their initial residents 25 or more years ago (a large proportion of whom are now considering moving to less active lifestyle locations or their homes have passed on to heirs).  But, new lifestyle choices are constrained by inability to sell their former dream homes (now up to 40 years old) in a community which has lost its buyer attraction.

As buyers continued to decline in number during the Great Recession, residents of many retirement communities became concerned about their increasing lack of mobility.  Several approached Parker Associates for advice on how to revitalize their communities to increase their appeal to the new wave of “Baby-boomer” retirees – prospects who reportedly are purchasing retirement homes in newly developing communities, but by-passing mature communities.

Findings

The problems of aging for buildings and communities are similar in many ways to those experienced by human beings.  Physical infrastructure often was not developed and/or maintained to adequately accommodate the emergent uses required of it.  Current resident interests were not adequately foreseen by community planners.  Assumption of residual property and infrastructure maintenance by property owners associations (HOAs and POAs) often resulted in inadequate funding, and hired management sometimes resulted in rudderless or random deviation from carefully designed initial planning.  Departure of the original developer often was accompanied by cessation of marketing programs, including entrance merchandising (first impressions) and hospitality programs (visitor inducements). Original long-term budgets often were based upon full development buildout, whereas, for a variety of reasons, initial master plans were not completed and annual revenues proved inadequate to growth needs.

In addressing their aging plight, most ownership groups established resident committees which often were dominated by former executives from unrelated industries who applied lessons from their work experience and often proposed consultant firms without significant experience in community real estate ventures. Most appeared to treat the aging problem as a marketing issue without due respect to the interrelationships between the “product” and the characteristics and preferences of current consumers in the retirement age bracket.  First response action usually includes a survey of current property owners (not prospective consumers).  Requests for consultant assistance usually are directed toward advertising and graphics specialists without regard to the holistic nature of the selling problem in terms of product definition and consumer preferences providing an adequate basis for targeted communications. Most house and lot sales are brokered by local real estate agents.

Conclusions

Revitalization for aging retirement communities is an emergent problem of very large scale that has not appeared to attract the interest of professional real estate developers, despite the fact that many of these existing communities with excellent amenities have considerable undeveloped land. They exist in both waterfront and mountain locations at all price levels with a wide range of attractive amenities.

The logical solution to revitalization of incomplete aging retirement communities is to address the issue in similar format to a new master planning process in which the consumer characteristics differ from those of current residents, the product contains irregularities that must be resolved in a revised strategic plan along with both natural and manmade amenities, and the organizational structure must be tailored to the existing organization of each community.  The marketing program must be an organic outcome of strengths and weaknesses of a new strategic plan.

Parker Associates believes that potential joint ventures with the property owners of the dozens of aging retirement communities in the United States Sunbelt constitute excellent  profit opportunities with modest capital funding for experienced community developers.

David F. Parker

david@parkerassociates.com

January 2012

We aren’t presenting this year, but we will be attending many of the events and will be exploring the exhibit hall on Friday, February 10th and Saturday, February 11th. We’d enjoy the opportunity to discuss any of your projects or ideas with you or just to sit down and chat about the state of the market and where it is going. Please contact us at jchris@parkerassociates.com or call us at 904-992-9888 to let us know where and when and we’ll be there.

Most national economists are approaching 2012 with caution.  The intransigent Congress and continuing European financial difficulties do not bode well for a surge in economic growth and a reduction in unemployment.  Projections remain at a modest 2 percent growth as in 2011.   On the positive side, new employment growth has been positive over the past four months, and new capital investment is occurring in several sectors. Florida ranked third in the United States for job growth in 2011 with a rate higher than nationwide for the first time in over three years.  With the third highest population growth rate in the nation, Florida now has over 19 million residents, fourth highest in the nation.

Florida’s senior population is projected to rise by 90 percent over the next 20 years.  By 2030, residents over age 55 will constitute 26 percent of the state’s population.  This increase, in concert with the nationwide surge of this age group, opens up increasing opportunities for new active adult communities  . . . and, as outlined below, creative potential for revitalizing large numbers of aging retirement communities in Florida as well as other Sunbelt states.

Parker Associates has been examining a number of mature retirement communities across the Sunbelt that were developed during the 1970s and 1980s, but never fully completed.  Most are owned by property owner associations that would like to increase their marketing potential for resales as well as add revenue from additional residents. For a more complete description of these potential development opportunities, please refer to our blog at http://parkerassociates.com/blog/index.php.

Lakewood Ranch surged to 391 new home sales at an average price of $397,149 in 2011, more than double the encompassing Sarasota/Manatee average new home sales price of $150,097. At the same time, a total of 307 resales were reported in Lakewood Ranch.  The long-awaited Lost Creek Resort rental community also opened during a busy 2011, as well as a variety of new commercial/institutional establishments.