At Fisher Island, a 215-acre development near Miami, there are two marinas, a tennis club, yacht service to the mainland, and a private beach. There’s a 22,000-square-foot spa, and professional kayaking instructors. Not to mention the planetarium overseen by a former astronomy professor.
“It’s Fantasy Island–our own little world,” says Karen Palmer, the community’s director of marketing.
That could be a problem. These days, homeowners want to get real. And the pricey amenities can be a turnoff to potential buyers at Fisher Island, which has lured only 550 new residents, half what developers had hoped to get when the project opened more than a decade ago.
Although can-you-top-this facilities have become standard marketing ploys in upscale developments, some say their day may be fading. Faced with the high maintenance costs of amenities, many homeowners would rather have fewer of them.
“Big facilities are impressive, but they’re also expensive to keep up,” says Lloyd Bookout, vice president of real estate practices for the Urban Land Institute, a nonprofit think tank in Washington, D.C. “People are starting to focus on what they use and enjoy every day.”
For developments that have gambled on expensive attractions, that could spell trouble. Fisher Island has been a drain on its financially troubled parent, MBL Life Assurance Corp., formerly known as Mutual Benefit Life Insurance Co., in Newark, N.J.
Certainly, part of the development’s problem is that it is an expensive place to live. Houses cost anywhere from $700,000 to $4 million, and residents must pony up thousands of dollars more to enjoy the island’s perks: $75,000 for an equity membership, plus $3,000 a year thereafter in dues. Want to play golf on the nine-hole course? That’s $2,000 a year more.
Even at less lavish developments, upkeep on amenities can be daunting; the cost of maintaining a single recreation center, including insurance, can sometimes be more than $1 million a year.
During the mid-1980s, thousands of upwardly mobile Americans flocked to new master-planned communities, mostly in the booming Sun Belt. Lured by swank clubhouses, golf courses and other extras, they paid premium prices for tract houses–on average, about $3,500 more than they would for a home in a traditional subdivision without glitzy amenities, according to a study by two California research firms, American Lives Inc. and InterCommunications Inc.
But when the developers–who often subsidized the facilities–completed the construction and departed, homeowner association fees spiked, sometimes doubling overnight. Homeowners were left holding the tab for some less-than-essential perks.
“Some expensive things that developers built in the ’80s, like waterfall sculptures and big conversation pits in community centers, weren’t being appreciated,” says Toni Alexander, president of InterCommunications Inc., of Newport Beach, Calif.
Recent studies show buyers prefer developments with parks, gardens and wilderness areas over those with fitness centers, pools, and tennis courts. Community recreation centers in new developments across the country are becoming more modest, and demand is up for low-maintenance green space.
Even golf courses, once the ultimate lure, are being reconsidered. A study for builders released by Market Perspectives Inc., a Roseville, Calif., research firm, asked 489 homeowners in master-planned communities around the country to rank the desirability of 28 amenities.
Walking paths, bike trails, parks and nature preserves topped the list. Private golf courses ranked last.
Golf courses typically cost $6 million to $10 million to build.
John Schleimer, president of the research firm, says since previous studies have shown that of those living in golf-course communities, fewer than 30 percent actually play, “developers are beginning to ask: `What do I really need to build to attract buyers?’ “
At Scripps Ranch Villages, a three-year-old, 1,100-acre San Diego development with homes ranging from $115,000 to $1 million, there’s no golf course, tennis club or community swimming pool. But there are 34 acres of parks, trails, and sports fields. Other features are aimed at everyday needs–a 23-acre shopping center and a daycare center.
The lack of splashy amenities hasn’t hurt sales; 900 families have bought homes, in line with the developers’ sales projections.
“We looked at communities that had pools and golf courses, but when it came time to decide, we thought they weren’t worth the much higher homeowners’ association fees,” says Jackie Smallwood, who stays at home with her 3-year-old daughter.
Her annual homeowners’ association fee is $840. The national median homeowners’ association fee is $1,476 a year, according to the Community Associations Institute in Annandale, Va.
Well-heeled homeowners are still willing to pay for pampering–they just want things that are more practical, says Judith Reagan, president of Community Consultants Inc., a Boca Raton, Fla., firm that advises developers and community associations on amenities.
She says that while residents are souring on expensive recreational facilities, demand for community services is skyrocketing.
“Wealthy or not, people don’t want to waste their time on small things, like getting the dry-cleaning or shoveling the walk,” she says.
Increasingly, community associations are contracting with “concierge-service providers,” companies that handle household errands and chores.
Hottest on the list of must-haves: package pickup and delivery, pool cleaning, and handyman repairs. Some firms will even do the grocery shopping for you, and stock your shelves before you get home.
That way, when the bill arrives, with its 15 percent to 20 percent markup, at least you can sit down with a nice bottle of chardonnay.
