Several struggling courses have been snapped up to be converted into hubs for Amazon, UPS and other major distribution operations. And even thriving clubs can be targeted for lucrative offers. “When a course is doing well and has the population to support it and is in a good location with great demographics, there’s higher demand for other uses,” noted one real estate investment executive.
While golf has enjoyed a renaissance in the U.S. during the pandemic, Bloomberg Businessweek reported, it’s still not as hot as the warehouse boom.
The surge in online shopping has developers looking for acreage, Bloomberg Businessweek reported, and that’s spurred a flurry of conversions of space that was formerly devoted to the links to now be used for logistics.
As investors hunt for industrial properties tethered to e-commerce, developers are buying golf courses and converting them into space for warehouses, Bloomberg Businessweek reported. A languishing course is often the largest tract of unbuilt land for miles around, and there are still plenty left over from the Tiger Woods-inspired course-building boom of the early 2000s that fit that description, despite the resurgence of interest seen during the pandemic.
In May, Bloomberg Businessweek reported, New York’s Onondaga County announced that Amazon.com Inc. was building a $350 million distribution center in the town of Clay. The 3.8 million-sq. ft. facility will sit on 111 acres of land formerly occupied by the Liverpool Public Golf and Country Club, a course that closed in March 2020 after 72 years in business.
Amazon has also unveiled plans to build a fulfillment center on a portion of a former course in Alcoa, Tenn., Bloomberg Businessweek reported
United Parcel Service Inc. also plans to build 1 million-sq. ft. warehouse and distribution center in Philadelphia on land that was most recently a golf course, Bloomberg Businessweek reported, and the defunct Broadmoor Golf Course in Portland, Ore., which was built in the 1930s and also closed last year, will be the site of a 345,000-sq. ft. industrial building that Prologis Inc. plans to erect.
“With golf you’re just limited to the income of the ongoing business concern,” Keith Cubba, National Director of Colliers’ Golf Course Advisory Services, told Bloomberg Businessweek. “There’s going to be a much higher yield on 200 acres of residential or commercial.”
That doesn’t mean conversion is always easy, Bloomberg Businessweek reported. Golf courses are often zoned as commercial, recreational, or open space—designations that can present challenges for industrial developers. Local opposition can also be an issue, with community leaders and nearby residents objecting to the increased noise and vehicle traffic that come with a new warehouse.
Still, developers are taking their chances, Bloomberg Businessweek reported. Thanks to online shopping, warehouses are booming, while other areas of the commercial real estate market have struggled during the pandemic. Companies like KKR, Blackstone Group, and Cerberus are among big investors pouring money into logistics acquisitions, betting that demand will remain strong even as lockdowns and restrictions ease.
“I’ve been in the business for over 30 years, and finally our asset class is the most popular in the world,” said Jack Fraker, head of industrial investments for CBRE Group Inc.
One reason for analysts’ optimism is that the trend was in place even before Covid, Bloomberg Businessweek reported. While golf’s pandemic resurgence may prove more temporary as other entertainment and sports options open up, even popular courses can attract conversion interest, because that signals the surrounding area has strong economic potential, according to Cubba. If there are people able to pay membership fees, it’s likely there are also plenty of businesses and affluent consumers nearby.
“When a course is doing well and has the population to support it and is in a good location with great demographics, there’s higher demand for other uses,” he said. “Right now it’s not a bad time to be in my business.”