March 27th, 2017

Will Palm Springs area homebuyers pick parks over golf courses? Developers are betting on it

Original Article by Rosalie Murphy for The Desert Sun

Two pre-recession developments in the Coachella Valley were re-introduced in 2016, each with one key change: Designers had removed planned golf courses, but preserved open space.

Virada, a master-planned community in Indio with about 1,300 homes, was previously proposed as a tract with a 27-hole golf course. The updated proposal, from Palm Desert-based Family Development, arranges neighborhoods along a public park instead.

Miralon in Palm Springs is a 1,150-home development from Boston-based Freehold Communities. It replaces a pre-recession project called Avalon, where builders actually installed an 18-hole golf course a decade ago. The course never opened, and a decade of desert winds destroyed it. Miralon’s developers plan to plant olive groves on the former fairways.

After all, developers and planners said, that’s what buyers liked most about living on golf courses — the open space, not necessarily the game itself.

A rendering for the clubhouse at Miralon, which will serve as a hub for the neighborhood of 1,100 homes.

“We have been working on several (large-scale) projects as things start to come back alive again. None of them have golf course amenities,” said Ron Gregory, president and founder of Palm Desert-based RGA Landscape Architects. “But instead we’re developing trail systems, exercise areas, places where people might walk on some attractively designed natural-style trail to go to yoga class… what we’re offering is an outdoor lifestyle, with several means of achieving that, but it’s not based on the game of golf.”

Many of the desert’s approximately 120 golf courses were built as real estate amenities first and courses second, National Golf Foundation chief business officer Greg Nathan said. Buyers would pay premiums for homes with fairway views, even if they didn’t golf.

In the Coachella Valley, “golf was a vital amenity that helped developers sell lots and homes while also giving the property some unique identity,” Nathan said in an email. “Of course not all golf courses built during the boom were related to real estate developments, but the percentage was disproportionately high.”

Normally, designing open space is an expensive choice for developers — it’s land that could be used for homes, after all — but golf courses also generated revenue.

Today, however, courses are no longer surefire investments.  Andy Vossler, president and CEO of Landmark Golf, estimated that a new 18-hole course would cost at least $6 million to build, not counting hundreds of thousands of dollars in annual maintenance costs. Further, many courses have faced shrinking memberships and declining revenues since the Great Recession began.

“We enjoyed a 30-year, 40-year window of time where open space was being supported by golf,” Vossler said. “The cost associated with golf, everything from land acquisition to operating the golf course, have reached a point that, except for unique situations, financially, golf courses can’t be sustained.”

Vossler estimated that 33 percent to 50 percent of residents in most golf course communities actually have memberships in their clubs.

Ed McMahon, senior resident fellow at the Urban Land Insitute, a think tank focused on land use and planning, offered a slightly lower estimate — 20 percent to 40 percent. He too believes many of those buyers purchased golf course homes because they wanted to live near protected open space.

And he believes buyers are still willing to pay a premium for those lots, even if their windows overlook parks or orchards instead of tee boxes.

The entrance to Freehold Communities’ Miralon development, where construction is expected to begin in mid-2017.

“When people realized you could also sell a house for a premium without designing a golf course, that really started to change the thinking,” McMahon said. “A number of developers, starting even before the recession, started to realize, ‘hey, I can provide something that many more people want and I can do it at much less cost.’ ”

Today, McMahon said, developers are exploring what that open space can look like. Many are designing parks with networks of walking trails. Others are building what McMahon called ‘agri-hoods’ — housing around agricultural land. The forthcoming Miralon project in Palm Springs will surround cultivated olive groves, and though developers said it won’t function as a commercial farm, the homeowners association may produce olive oil for residents.

“We wanted to install a more resource-efficient land use in that open space, and two, we wanted to create something that was broadly appealing to our likely homebuyers — which is not to say that golf doesn’t have broad appeal, it’s just that there are golfers and non-golfers,” said Brad Shuckhart, Freehold Communities’ Division President for California. “Everyone we surveyed enjoys open space, particularly active open space, that they can walk in, hike in, bike in, gather socially in.”

Vincent J. Barbato, principal at Family Development, said he and his colleagues made a “pretty immediate” decision to remove the planned golf course at Virada after they acquired the development. He doubted officials would have approved construction of a golf course, and if they had, it would’ve been an unpopular proposal mid-drought. Further, Barbato said, to make a course substantially different or better from the desert’s dozens of others would have been exorbitantly expensive.

“You can make it more meaningful to more homeowners, and you can certainly make it less taxing on resources,” Barbato said. “I think what’s going to happen is, as leaders in this industry build communities without golf courses… the trend will shift.”

Shuckhart said builders are currently repairing Miralon’s infrastructure, but hope to offer Miralon lots for sale in the next few months and homes by the end of the year.

Barbato said Virada’s homes will not be available this year.

Rosalie Murphy covers real estate and business at The Desert Sun. Reach her at or on Twitter @rozmurph.