Golfing’s Effect on CRE: A Birdy or a Bogey?

The golf industry in the U.S. has experienced a resurgence in recent years, fueled by a pandemic-fueled golf boom and renewed interest from younger generations. Participation in golf increased in 2022, with a net increase of 500,000 golfers, and the number of golf courses in the country has stabilized, with closures outnumbering new openings by less than 1 percent, according to National Golf Foundation.

One factor contributing to the renewed interest in golf is the “Covid effect”, which saw 6.2 million people take up the game for the first time during the pandemic, with many of them being younger than baby boomers. This is reminiscent of the “Tiger effect” of the early 2000s, when golf star Tiger Woods inspired millions of Americans, particularly middle-aged baby boomers, to take up the game.

However, despite the renewed interest in gold, there are challenges facing the industry. Existing owners are reluctant to sell their golf courses, and valuations are hard to determine. New development of golf courses may see an uptick in the future, particularly as part of new residential master-planned communities, but the barriers to entry for new courses can be high in many places, and capital is more expensive than it was a year ago.

In addition, some golf course redevelopment projects have faced opposition from local communities, making it difficult or even impossible for investors to proceed with their plans. For example, in Denver, a vote last month kept an easement on the former Park Hill Golf Course being lifted, stymieing redevelopment plans by the course’s owner. Similarly, in Reston, Virginia, the future of the Reston National Golf Course and Hidden Creek Country Club is uncertain due to opposition to development plans.