Ever wonder what occupies the mind of a person who writes about real estate for a living? Well, believe it or not, lately I’ve been ruminating about the Walt Disney Co.
No, I don’t have small children. Nor do I plan on visiting any of the company’s theme parks in the near future. My parents lived in the Orlando area, and my kids, who are both adults now, had been to Disney World more times than they have fingers. If I don’t again step foot in a Disney theme park for the rest of my life, that’s just fine with me.
So, then why am I dwelling on the Disney company? The short answer is, they are so contrary in real estate developments I can’t quite figure out if they’re brilliant strategists or they live in their own Fantasyland.
Two corporate announcements earlier this year caught my eye.
First, Disney reported it would build its first stand-alone resort at Kapolei, Hawaii, about an hour west of Waikiki. This was a particularly aggressive investment (359 hotel rooms, 481 timeshare units, spa, convention center, etc.) because Hawaii’s tourism business has been soft for a number of years.
In the first half of 2010, the average daily hotel room rate in Hawaii dropped almost $10 a night from the same period a year earlier. Hotel occupancy did rise, but only to a weak 69 percent, which means visitors were coming because of room discounts and deals.
The second announcement, which is more relevant to this column, is that Disney is returning to residential development with an upscale vacation-home project to be built on the grounds of Disney World in central Florida.
The proposed Golden Oak gated community will include a 445-room Four Seasons hotel, two golf courses and 450 homes that will sell at a price point between $1.5 million and $8 million.
If the resort in Hawaii seemed aggressive, then with Golden Oak the decision-makers at Disney have either bit into the witch’s poison apple or they really, really do believe in happy endings.
Scanning AOL market data on the Orlando area at the halfway point of the year, average home prices peaked in 2007 above the $310,000 mark and have now dropped to $121,492. In June, there were almost 10,000 homes on the market, plus 30,000 foreclosures.
That all looked discouraging, so I got to thinking, maybe if I focused on the upper end of the market, things would be different, so I checked in with Roger Soderstrom, owner of Stirling Sotheby’s International Realty in Heathrow, Fla. His comment: "In today’s market, yesterday’s $1 million home is today’s $500,000 home."
Not particularly encouraging.
Then I thought, well, The Walt Disney Co. about 10 years ago unleashed on the central Florida region the town of Celebration, which turned out to be a very successful, 8,000-home development of mostly high-end properties.
I gave a call to Dana Hall-Bradley at Century 21 Premium Properties, who works the Celebration area.
When I asked how the Celebration market was faring, she responded that homes originally selling for $1.8 million and $2 million in Celebration are now selling for $700,000 and $800,000, around 50 percent below what they were originally selling for in 2004 and 2005.
This doesn’t mean the market for luxury homes in central Florida is dead. If the price has been reset, a house will move fairly quickly.
"Luxury homes that are pricing right will go under contract within 30 days," Hall-Bradley said. "If it’s a distressed luxury home that you can get for $700,000 or $800,000, they are selling pretty fast. On the other hand, I have a home that originally listed for $1.8 million and I have it at $1.4 million. I’m getting few showings, but if the seller drops the price to $900,000 where it should be, it would move."
In central Florida, once you get into the $1 million range, you get a lot of wealthy, discretionary buyers, who enjoy a good deal as much as you or me.
"There were 96 closings of Orange County (Orlando and environs) homes in the $1 million-plus category in the first six months of 2010, up from 50 closings for the same time period the year before," Soderstrom reported. "In Osceola County, where Celebration is, there has not been a sale over $1 million this year."
I pointedly asked Hall-Bradley and Soderstrom about the new Disney development, and despite the current woes in the Central Florida housing market, they were both optimistic, but for different reasons.
Soderstrom believes the Disney name is so strong and the amenities at Golden Oak so considerable that it will attract a specific section of the high-end buyer’s market. "This will be a second, third or fourth home for these buyers, and it will be on Disney World grounds," he said. "It’s a piece of magic you can’t get anywhere else in the world."
Hall-Bradley thinks Golden Oak will be successful because the buyers will either be foreigners or wealthy sports figures. Specific upscale Orlando developments are wildly popular with golfers, baseball and basketball players. (Tiger Woods’ infamous auto accident occurred near his home in Isleworth.)
"Golden Oak is going to draw a lot of foreign investors because Disney will be catering to them," she said. "And, you will have the athletes because of the amenities this project offers. Athletes have young families and they like the fact they are close to the attractions. There’s going to be a concierge service, so if the family wants to go to the park, someone will pick them up and take them."
Hall-Bradley has taken a tour of Golden Oaks a number of times, and in one visit she took a client, a baseball player’s wife. "She was looking for a home in the $2.5 million range," Hall-Bradley said. "She liked that it was a gated community, there was a Four Seasons, and she could take her kids to Disney World."
When Celebration opened, it attracted a lot of athletes, but now there may be only four or five athletes still living there, which might be a metaphor for central Florida in general. For decades, the region once attracted legions of Easterners and Midwesterners looking for a place in the sun. Those glory days may be gone for good.