question for local experts

a builder is a builder, that's what they do

i don't think you could pay them to stop building, especially when all their employees show up for work

a builder is a builder, that's what they do

i don't think you could pay them to stop building, especially when all their employees show up for work

sorry, i guess you misunderstood.

i asked about developers. not contractors. developers are presumably in business not to construct, but to make money.

i would like to know:

why are developers continuing to build and infuse such a huge volume of inventory in the local housing market ?

obviously, it can't be because they want to make more money. we all know that more houses doesn't mean more money. and why are they denigrating the value of homes they have yet to sell instead of adding infrastructure, amenities, green space, that are sorely lacking for a successful housing market etc. how do they plan to sell inventory that's already just sitting there with nothing but more construction in site? surely with 7500 properties on the market only a dimwit would build more residential? i mean surely they must be getting some heat from their lenders about the fact that they're clueless on the marketing and development side. i'm just a business person, so it's difficult for me to understand the lack of business sense and logic here.

is it ignorance? is it arrogance? is it both? the only answer i would prefer not to hear is "that's how we do it down here". thoughtful responses only please! :blush:

I think that is an excelent question, and I too will be interested to hear what the local experts have to say. I suspect the answer has one foot in "survival" and the other squarely planted in "greed".

They have to believe that the market is just about to come back strong (survival) and when it does, they want to be on top of the pile (greed).

Additinally, there's not much money to be made in infrastructure and green space.

I think that is an excelent question. I suspect the answer has one foot in "survival" and the other squarely planted in "greed".

They have to believe that the market is just about to come back strong (survival) and when it does, they want to be on top of the pile (greed).

There's not much money to be made in infrastructure and green space.

development is more than construction it's planning and marketing.

actually, if you allow for a 1/4 acre of green space per building or ensure a safe and comfortable infrastructure, home prices show you can charge twice the amount for the actual residence. even with our land prices, it's actually financially easier on the developer because they need to invest less in construction cost and generally need to show their lender good sales movement. so the greed argument doesn't make sense at all. nyc is a great example. they alloted 6% (843 acres) of manhattan's total land for central park (only one of many parks), as a result, home prices around the park are often 200-400% more than other manhattan properties. beverly hills is another great example too. what makes properties more valuable is what ensures a good return on investment for developers.

if developers decide to aim for an urban density model (1000 people per square mile), as they have here, that's fine too, but it will also require the infrastructure of an urban environment in order to ensure a good real estate market. seeing that we do not have the appropriate transporation infrastructure for the rising population a good developer or team of developers would have invested in a tram system running down the median of 98 from destin to rosemary beach. that would increased the market value of all properties and expand the audience for this market. not to mention make things MUCH safer. that's important, because this is a family vacation area and though our highways our dangerous our hospital is classifed as "rural" doesn't have a certified trauma center.

as for survival..that's more a mentality than a business plan, but that kind of emotional approach to business might explain why they don't have an educated plan or vision for true success.

Additinally, there's not much money to be made in infrastructure and green space.

There is if the developer includes them on the sales brochure/pitch...but leaves them off the signed sales contract.

:cool:

There is if the developer includes them on the sales brochure/pitch...but leaves them off the signed sales contract.

:cool:

classic sowal con move!!! in all myyears in nyc i never met people with such criminal minds! that behavior hurts sales prices in the region! our friends point to the nytimes article about st.joe's faked out "free" amenities as their reason for not shopping in this market.

actually just heard from some folks that we can expect the demise of sandestin's village in the next year. i think that will coincide with the demolition of the baytowne golf course for condos. that should create another downturn in the sandestin home market.

I can show you plenty of cases where the developer bought property, ran people off the properties, and now the property sits as vacant land, without being developed. These people must have pockets deep enough to cover the carrying costs.

There are several other small and large projects where developers are building. Maybe they bought the land at a cheap enough price point where they can build and offer major discounts to buyers. :idontno: Or, perhaps they cannot sell the vacant lots, and the banker is knocking on the door -spend and pray move.

Also, I believe there is some legal stuff about development allowing an approved project to move forward, only if commencement of infrastructure or construction begins within a limited time frame.

There could also be the little part about a builder being able to borrow on home to be built. ie- they get their first couple of draws from the construction loan, and it is more than enough to cover their costs, freeing up more money to cover more debt. I know you said and repeated, that you were talking about developers, and not builders, but down here many builders are "developers."

actually just heard from some folks that we can expect the demise of sandestin's village in the next year.

If you mean Baytowne Village, I highly doubt it. They just finished adding on to it, and during the busy seasons it does get very crowded. Without Baytowne Village, the condos, hotels, and convention center there would suffer tremendously.

I am very interested in this question.

As someone who spent 30 plus years in Public Relations and Marketing, I am appalled at how many developers down here I have asked: "

What did your Market Research show? " Only to receive a blank stare in response.

I think SJ is right. For the most part, the developers here are builders who had (or have) good connections with the powers that be in local government...as well as a smart attorney!
:(

I think the reason you see dev/builders moving forward is because the process started years ago. When we see something break ground today it did not start last week. The DO process takes forever and many dev/builders were wrapping it all up when the market turned. Money is on the table and spoken for. I think many have no choice but to move forward...

I think many have no choice but to move forward...

Their salaries and salaries of the pre-contracted workers are tied up in the construction loans sitting in the bank. The bank will not allow them to draw on the loans unless they move forward on the project.

For example: Clear and plot out development complete...draw cash; lay in utilities...draw cash; layout and install roads and sidewalks...draw cash. During the last RE boom in Florida (and other places) this is as far as some developments got--a fancy sign and empty gate shack at the entrance of an empty subdivision with roads and parcels of land with sewer pipes sticking up.

i'm responding to all these great answers....so forgive if it's hard to tell which one!

in fact, there are state laws that require dri's (developments of regional impact) to contribute to affordable housing and infrastructure. there are 22 such developments in walton county and none of them have been required to comply to state laws by our county government.

of course, you would think that having just built the village, it would still be there in a year. if it is, it will not have the same quality of retail tenants (think t-shirt shops and tattoo parlors). rampant underage drinking and alcohol served to minors (which has caused the sherriff to deny any requests for security on the property) and sandestin's marketing $99 rooms to "budget traveler" and low-end conferences is destroying tenants' revenue potential. sorry, the folks that sandestin markets to do not have much of a discretionary income. they could definitely market their property higher end, but they would have to know how and have to work harder. of course, it sounds like common sense to you and me that they should know enough about marketing to sustain their developments and cross-promote, but they aren't that bright! in fact, they will soon be destroying one of the few amenities left at sandestin, the tennis courts, to make way for another high rise. baytowne golf course is on its way out as well. none of these developments has broken ground yet nor were they approved until AFTER the bust, and they are STILL moving forward.

in fact, as a 20 year marketing veteran, when i ask local developers about their demographics, the truth is, they've paid for expensive marketing analysis and ignore it. they know all about what sells and what will make them the most money. but many times it's about ego and emotion for them. also personal pecadillos. i can't tell you how many times i've heard that developers don't want "ethnic types" as customers. offensive, but they're too dumb and arrogant to even know how to pretend! as any consumer marketing professional knows. old white guys don't make you cash, especially when it comes to housing and family vacations!

my research shows that sandestin homeowners are comprised of 3 of the top high-worth demographics in the nation. most brands would KILL for the opportunity to speak to this audience. instead they're just bullied and abused by shortsighted intrawest and sandestin employees. seriously, you really have to WORK HARD to fail at making sandestin a great resort. and that's what's happening.

Their salaries and salaries of the pre-contracted workers are tied up in the construction loans sitting in the bank. The bank will not allow them to draw on the loans unless they move forward on the project.

For example: Clear and plot out development complete...draw cash; lay in utilities...draw cash; layout and install roads and sidewalks...draw cash. During the last RE boom in Florida (and other places) this is as far as some developments got--a fancy sign and empty gate shack at the entrance of an empty subdivision with roads and parcels of land with sewer pipes sticking up.

i can count at least 10 of those that i know of right now. does not exactly inspire confidence in potential buyers of existing properties does it?

I think the reason you see dev/builders moving forward is because the process started years ago. When we see something break ground today it did not start last week. The DO process takes forever and many dev/builders were wrapping it all up when the market turned. Money is on the table and spoken for. I think many have no choice but to move forward...

i know what you mean, but there's always a choice. and it's not as though moving forward will prevent them from defaulting. so it's merely delaying failure.

i know what you mean, but there's always a choice. and it's not as though moving forward will prevent them from defaulting. so it's merely delaying failure.

That could be one way of looking at it. Many feel that the market will be ok. Do you really feel they all will fail?

my research shows that sandestin homeowners are comprised of 3 of the top high-worth demographics in the nation. most brands would KILL for the opportunity to speak to this audience. instead they're just bullied and abused by shortsighted intrawest and sandestin employees. seriously, you really have to WORK HARD to fail at making sandestin a great resort. and that's what's happening.

Intrawest was bought out by Fortress (a private equity group) back in October "on the cheap." Fortress couldn't care less about Sandestin...the real prize in that Cracker Jack box they were after was 10 ski resort properties. Fortress will slice and dice this aquistion any way they can in order to wring out maximum profit and discard the remains back on the market. Private equity groups are brutal and only care about one thing...maximum profits for "the club and its members" with minimum input...everything and everyone else be damned.

No doubt the deep pockets of the developers - builders are just using this downtime to regroup. This area is so attractive, everyone who has been here wants a piece of it, they are just going right ahead with their plans. The surplus of labor now means the builders can build for less money, and since the major cost component, the land, has been paid for, the building on the land is just not that big a deal. This area has always come back strong and will do so again, sooner than later. Now with the proposed airport, it is really a no brainer. If you have the bucks to hold on for a year or maybe even two years, the returns will be there.

Sandestin is primo and I hope what you are saying about the destruction of the Village is not true.

I wonder if it's not the Village (which seems to be a nice enough cash cow) but the Market Shops, which would seem to be pretty redundant once Grand Boulevard is completed. Great location, but not a shopping center that seems to generate much interest, and it seems like they've got a fair amount of tennant turnover.

As far as Sandestin employees go, from the former employees I've talked to, the management problems and labor difficulties go back about three different ownership changes.

I think the reason you see dev/builders moving forward is because the process started years ago. When we see something break ground today it did not start last week. The DO process takes forever and many dev/builders were wrapping it all up when the market turned. Money is on the table and spoken for. I think many have no choice but to move forward...

Good point and doesn't the DO have an expiration? So if they do not continue with the development they may have to go through the process of receiving yet enother DO. Just wondering.