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The New Appeal of Gated Communities: Accommodating Changing Lifestyles

In the past, critics have taken aim at gated communities. Nearly 20 years ago, two academics from California wrote Fortress America: Gated Communities in the United States. They criticized these communities as being hived-off from the larger world, suggesting that what residents sought in them was less about community and more about privacy and security. This protective insulation, they wrote, made the gated communities safe and predictable, but also, somewhat bland and even boring.

But the gated communities had bigger problems ahead of them than the critics. We know how golf, at the center of many of these communities, first drove their great popularity and expansion but then, as golf and real estate declined in tandem, the gated community idea struggled as its financial model tottered and, in some instances, collapsed.

However these reversals were neither fatal nor permanent. Fast-forward to present era, the gated community has proved to be remarkably adaptable and fully capable of continuing to exert its strong appeal for many.

The key to these communities’ continued success has frequently been the commitment and creativity that the residents bring to their communities and their capacity for reinventing daily living. This knack for innovation characterizes much of the current scene and the focus of this article is to describe the trends gaining momentum in the near term.

In the past, we have seen residential or gated communities often constructed with a view toward attracting certain demographic and lifestyle segments. Thus location (the Sunbelt, with Arizona and Florida especially popular), activity (golf being the go-to attraction) and architecture (well-suited for empty nesters), all combined to attract a certain a segment and fill a desired ideal or important shift in life-status.

Golf and So Much More

“Build it and they will come.” That is twentieth century thinking. Now, the “new construction” is more organic, more fluid, more exploratory—and more personal. With many communities already established, the emphasis is on unlocking the potential that exists both within the physical facilities and operating environment of the community as well as within the evolving interests and inclinations of the current (and future) residents.

For many, golf will continue to be a magnet that powerfully draws—as well as many other pursuits—and supports a much wider social network. Desert Mountain Club in the Sonoran Desert region outside Phoenix and Scottsdale, features six Jack Nicklaus Signature golf courses, but the recreation offerings ripple out beyond this extensive system of links.

There are also extensive hiking and biking trails as well as tennis and pool facilities thoughtfully designed to beat the dry desert heat. Youth programming is supported with camps and other programs that serve not only the resident members but also their grandchildren and other extended family and friends. And not all gated communities are fenced-up fortresses with forbidding barriers erected to signal “no admittance.” Quite the opposite: Desert Mountain Club membership does not require property ownership.

Changing Lifestyles and Gated Communities

Consider this: much of the big money in real estate these days is placing bets on a trend labeled “the de-suburbanization of American.” McMahon Group President Frank Vain wrote on this in a recent issue of The McMahon Report, “Know Your Place,” Vol. 10, Issue 6. Among other things, this trend indicates that senior preferences may move away from spacious, resort-like vistas to more engaging urban neighborhoods, replete with cafés, shops, universities, museums and theaters. So, for example, many senior living communities, just like private clubs, must re-learn once again that dining preferences are continually evolving and therefore offer a range of choices: bistros, cyber cafes, bars and lounges.

In a similar fashion, the focus on wellness and health continues to go wider and deeper in public and private domains alike. Trendy senior options now serve body and soul with pickle ball courts, resistance pools and spas as well as outdoor yoga and meditation areas. Will this path for gated communities diverge with Baby Boomers’ latest desires—or possibly converge further down the road?

Many of the developers that pioneered gated communities in booming Sunbelt markets found themselves, in the wake of the Great Recession, caught in a collapsing real estate market. However, gated community clubs are rebounding, according to a recent survey by McMahon Group. Real estate sales are up in 81 percent of surveyed gated community clubs by an average of 12 percent from 2014, indicating a stronger position for these clubs than in recent years. Eighty-four percent of managers said conditions in their real estate marketplaces were either good or excellent. Overall, member activity is up due to growing real estate sales, improved perceptions of the club’s and the community’s value, and upgraded facilities.

One explanation for improving conditions may be found in these clubs’ governing styles, which pay attention to their members’ needs and focus on the future. Ninety-one percent of responding clubs have surveyed their members in the past four years and 87 percent have strategic plans.

Other survey findings show 59 percent of gated community clubs have a mandatory membership policy for residents, but just 42 percent of residents live at the club throughout the year. For clubs without such policy, 67 percent of community residents are members of the club. Interestingly, 66 percent have spa facilities, which is a higher percentage than clubs with 18-hole golf courses at just 63 percent. Seventy-one percent of these clubs make use of a dining minimum.

Gated communities share a common recognition that “we’re all in this together”—galvanizing communities to make strategic investments and improvements. Gated communities have made and will continue to make the necessary adjustments in their business model, their mission and their lifestyle offerings.

At the heart of this trend is a reminder of how social capital gets marshaled, allocated and ultimately enjoyed. The unique experience of gated communities illustrates how people with common interests, shared resources and active participation facilitate the enjoyment of many leisure pursuits and other shared activities. (See box on page XX, “The Economics of Club Goods.”) Gated communities may have an advantage over typical private clubs in this regard. Geographical proximity, common facilities, shared governance and member engagement are providing an environment conducive to innovation that is in turn spinning off an amazing variety of activities that are ideally enjoyed in a community setting and against a decidedly social backdrop.  

The Wellness Factor

Healthy is hot. The debate as to whether the club should have a “fitness room” or not has been settled for some time now. The more interesting and relevant question is just how deep and broad will this trend work its way into the club scene. Fitness has morphed into broader concerns of health and well-being. And its impact stretches beyond any room with exercise equipment and into many of the club offerings: spa, dining and athletic pursuits. Gated communities are leading the way:

The Landings is nestled on Skidaway Island just outside of Savannah, Ga. Now, very much a multi-generational community, it offers a popular Life Extension and Fulfillment (LEAF) program that encourages all members to stay out in front of the aging process through healthy eating, exercise and personal development. LEAF’s regular seminar and lectures cover a range of topics including memory enhancement, nutrition, medical advances and even acupuncture.

Bonita Bay Club in Naples, Fla., has just taken a giant leap forward in promoting the health of its 2,000 members (and their families). It has now moved beyond its formerly popular and heavily utilized fitness facilities to what is now aptly labeled a Lifestyle Center. It’s a 60,000-square-foot facility, with approximately 20,000 square feet of space dedicated to a range of fitness, spa, health, and nutrition programs as well as casual dining and healthy, made-to-order options at the WAVE Café. The Fitness Center features a collection of strength, cardio and functional equipment as well as programming for spin, Pilates, Gyrotonics® and TPI Golf Fitness.

The balance of the facility is operated by Lee Memorial Hospital in a collaborative agreement with the club. Thus the facility transcends the expected boundaries of a fitness center as it is more integrative in its philosophy than the traditional medical facility. Indeed, Bonita Bay’s Lifestyle Center is setting a new standard for a holistic approach to health and well being. The facility opened this past summer and the community is all-in. Fitness activity has increased on the order of 50 percent, while spa participation doubled. People feel better just being there—what with the facility’s open and contemporary design—and thus the center buzzes with the hum of people visiting and lingering over smoothies and healthy food fare.

Wyndemere Country Club, also in Naples, Fla., has been designated one of America’s Healthiest Clubs by Prevo Health Solutions, a club wellness consulting firm. Now it is in the process of becoming a Certified Blue Zone facility. Blue Zones refer to areas around the globe where people seem to have mastered the knack of longevity. National Geographic explorer Dan Buettner labeled areas like Sardinia, Italy; Okinawa, Japan; and Loma Linda, Calif., as Blue Zones in recognition of the propensity of people in these areas to reach the age of 100 at a disproportionate rate. His research and writing, coupled with other studies, have been used to develop a range of lifestyle management tools and philosophies that help people live longer and healthier lives.

Communities and organizations—Wyndemere being one—have decided to take a series of steps and use a variety of approaches to shape their club environment to make healthier choices easier. Wyndemere recognizes that these benefits apply to members and staff alike, so their Blue Zone ambitions aim not to just make the residential community a great place to live, but also a great place to work. Not surprisingly, one of the contributing factors to longevity, in addition to housing and habitat, is also the social network. It seems social connections contribute mightily to happiness and the habits of health living. So we should not be surprised to see clubs at the center of this trend that recognizes that social cohesiveness adds to life—both in terms of enjoyment and longevity.

Sidebar: The Economics of Club Goods

In 1965, the economist James M. Buchanan published a paper entitled “An Economic Theory of Clubs.” While some goods are private (owned and consumed by individuals and households) and others public (shared with many), Buchanan was interested in a third type. Thus “club goods” were shared by more people than would ordinarily share a private good, but substantially fewer than would share a public good. Club goods make good sense in Buchanan’s reasoning because sharing in this limited fashion delivers an economic benefit in driving down cost, but also utility or satisfaction in finding the “just right” size for collective enjoyment of the club good (and avoiding congestion). Buchanan and others set about finding the optimal size for the most desirable cost and consumption sharing arrangement. The question is an important one for clubs, and it would seem to us that the optimal size for clubs, especially gated communities, is definitely trending upward at present. By the way, Professor Buchanan won the Nobel Prize for Economics in 1986.


Club Trends Winter 2016