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Land Acquisition Difficulties Lead To Smaller MPCs01-02-17 | News

Land Acquisition Difficulties Lead To
Smaller MPCs

Increasing land costs, as well as construction costs, are causing master planned community developers to cut down on the total acreage in their projects, as witnessed by the top-selling MPCs in surveys that have been conducted every year since 1994.

Citing findings from their annual surveys, real estate consulting company RCLCO reports that since 2005, master-planned communities have been trending smaller, due in part to the challenges that home developers have in acquiring, holding and financing large parcels of land.

Conducted every year since 1994, the Master Planned Community Survey identifies the top-selling MPCs in the U.S. The final results from the 2016 survey haven't been publically divulged yet, but two company officials, managing director Todd LaRue and vice president Brian Martin, recently released a summary of the key current and past trends.

In this summary they state that from 1994 to 2005, larger communities such as The Woodlands (28,000 acres) in Texas and Highlands Ranch (22,000 acres) in Colorado were consistently top sellers and that during that period, the average annual combined sales of the top 10 MPCs were approximately 16,000 homes, peaking in 2005 at 21,360.

As should be expected, average sales of the top 10 plummeted in the early recession years – bottoming out at 4,544 in 2009 - but post-recession sales are still registering numbers only about half or less than the best years. For example, the average annual combined sales for the survey's top 10 in 2015 were only 9058 homes.

And the survey is showing that much smaller MPCs are making it to the list, such as Lake Nona (7,000 acres) in Florida - evidence according to LaRue and Martin that, "increasing land and construction costs have driven developers to create smaller MPCs than those seen in the 1990s and early 2000s."

Another example they reference is Nocatee, also in Florida, that is one of the larger, most recently developed communities on the list but is less than half the size of The Woodlands.

The final results of the 2016 survey are scheduled to be released later this month.