Golf Courses Sell At Fast Pace, But Developers Are Taking Mulligans On Reuse

As golf fans shift their gazes this week toward the majestic Augusta National golf course and the Masters Tournament, in Chicago, the game's many courses are apparently lodged in a bunker.

Golf courses in the Chicagoland suburbs are selling quicker than at any point over the last decade, according to CoStar data — further evidence of the sport's long-term decline and winnowing popularity with young people.

But buyers are lining up from a rather surprising sector of real estate: industrial.

From a certain perspective, the marriage might seem ideal: Golf courses boast hundreds of acres of land in suburban areas, which might suit surging industrial development looking for those exact attributes.

But there lies the rough: Who wants to trade the sight of rolling greens for sheets of corrugated metal?

It is a question communities and developers are grappling with right now.

“What a buyer wants doesn’t always match up with what the community wants,” NAI Hiffman Executive Vice President Chris Gary said. “Even the nongolfers say, ‘I don’t golf, but I like having a golf course next to me,’ and the towns have to listen to that.”

But the recent flurry of sales may not continue if prospective buyers encounter opposition from local residents who don’t want the truck traffic brought by distribution buildings or overburden local services such as schools with residential projects.

Developers can secure approval of plans to remake the open spaces, according to Gary, a former golf course designer who recently helped several club owners sell their courses. They just have to be prepared to work closely with nearby residents and municipal officials and not be discouraged if initial plans get shot down. In the end, it’s worth it, he said.

“There are a ton of hurdles, far more than for most projects, but how often do you find rectangles with hundreds of acres of open land near an expressway?”

Saxon Partners saw an opportunity when the nearly 80-year-old Lansing Country Club went on the market.

The Hingham, Massachusetts-based developer purchased the 175-acre club, which straddles the Illinois-Indiana state line about 26 miles south of Chicago, in December 2020 for $2.5M. It also got a green light from Munster, Indiana, officials to create a $160M campus devoted to research and light manufacturing.

But securing a deal took more than four years, Lansing Country Club President Michael Luck said. Several industrial developers approached Munster and club members when it first went up for sale in 2016, but each proposal fell apart. The developers saw a site in the center of a road network that includes I-94 and I-394, perfect for logistics and distribution, but officials worried about the possible impacts on nearby Community Hospital.

“It would have meant a large amount of truck traffic in and around the hospital area,” Luck said. “We just got pushback from the town and the residents.”

Munster’s leaders eventually changed the area’s zoning from industrial to mixed-use, according to Gary, who represented Luck’s club, and the industrial developers walked away.   

“I originally thought it would be a slam dunk to find someone,” Gary said.

And like an increasing number of golf clubs across the U.S., the Lansing members needed to sell. When Luck joined more than 20 years ago, the club had between 350 and 400 members, but by 2020 that number had shrunk to less than 200, he said.

“We couldn’t generate enough revenue,” Luck said. “It wasn’t enough at that point to sustain ourselves.”

The National Golf Foundation said the number of players shrank from about 30 million in 2005 to 24.3 million today. And nearly 1,250 golf courses closed between 2005 and 2018, with about 200 closings in a typical year, according to a 2020 report from the National Parks and Recreation Association.

Gary called the decline a waning of the “Tiger effect.” Golf briefly became a pop culture sensation after Tiger Woods appeared in the late 1990s and began a string of victories at the sport’s top tournaments.

“He was a 20-year-old African American, a little brash, an ass-kicker, and a lot of people felt an affinity for the guy,” he said.

Many municipalities tried to cash in on the trend by opening their own golf courses, Gary said. And since publicly owned courses don’t pay property taxes, they can operate at low costs, further putting the squeeze on privately owned clubs.

Cook County property taxes were the Lansing club’s real killer, Luck said. The golf course is roughly split even between two states, and members paid about $20K per year in taxes for its land on the Indiana side but roughly $155K for the portion in Illinois’ Cook County.      

Lansing Country Club isn’t a fancy club serving wealthy golfers, he added.

“We call ourselves a sports bar with a golf course. It’s a great place where middle-aged people could go, feel safe and have a few drinks. Everybody was friends there.”

Until the coronavirus pandemic, sales from the restaurant and bar helped keep the place afloat. Most clubs saw surges in use and revenues last year as more people took up golf as a way to get exercise and fresh air, at least temporarily reversing the sport’s decline, but at Lansing, the restrictions on indoor dining cut deep.

“Golf itself in the past few years wasn’t supporting the club at all,” Luck said.

The $2.5M offer from Saxon meant getting out from under a burden that was unsustainable, but no one got rich.

“It’s not a big windfall, but everyone will be made whole and get back what they put into the club,” Luck said.

What made the deal work is that Saxon’s offer was paired with a proposal that meshed well with local leaders’ overall vision for Munster, he said.

Instead of distribution and heavy manufacturing, the town and Lake County officials put forward plans to attract medical researchers, pharmaceutical firms and businesses related to life sciences, according to the Northwest Indiana Times.

The $160M campus that Saxon will create over the next five years will include on the Indiana side light manufacturing buildings for medical technology firms set around a pond, with walking trails and green space. The company may sell the Illinois side to the Forest Preserve District of Cook County.

“It would have been hard for the town to reject something that follows their own plan, so this time the sale went pretty smoothly,” Luck said.  

A venture led by former Colliers International Chicago CEO David Kahnweiler, which bought the shuttered Green Acres Country Club in north suburban Northbrook for $9.8M in 2018, is still struggling to win approval for its proposal to fill the 127-acre site with new housing.

“They thought they were going to get a rezoning from Northbrook to do what they wanted to do, but it hasn’t happened yet,” Links Capital Advisors principal Chris Charnas said.

Charnas brokered more than one dozen golf course sales in the U.S. last year and has seen many developers fail to come up with acceptable plans. Two years ago, he helped the former owner of Klein Creek Golf Club in west suburban Winfield who was struggling with deferred maintenance at the clubhouse sell the course, and it wasn't easy.

"I got 20 calls — and 19 were from developers," Charnas said.

But the site was originally a water retention area for the surrounding homes, so filling it with new structures would have been difficult. The eventual buyer kept it as a golf course.

"The buyer turned it around and totally kicked ass last year," Charnas said. 

The struggle to remake Green Acres may have gotten a bit harder this week. On Tuesday, Northbrook Village Trustee Kathryn Ciesla won the mayoral election with more than 60% of the vote. She and other village board members have criticized Kahnweiler’s group for first proposing in 2019 to fill the Green Acres with about 800 homes and later returning to the board with a 600-unit plan.

“We’re a pretty environmentally conscious community, and we didn’t think much was done to preserve the green space and the trees,” she said.

In addition, the board was told by local school officials that if the district had to absorb as few as 30 more children, far less than the number likely to reside in Kahnweiler’s development, the packed elementary school would need new facilities, Ciesla said, and there was no plan for that expense.

Gary said that is why new residential projects can sometimes arouse as much opposition as industrial uses.

“Municipalities used to love residential because it meant growth, but now many municipalities are broke, so when someone proposes dumping a bunch of kids into the parks and school districts, they say, ‘Who’s going to pay for it?’”

Ciesla isn’t necessarily against developing the site. She points to Prairie Crossing, a subdivision of homes and condos in north suburban Grayslake, as a possible model. The community was built starting in the 1990s and emphasizes the preservation of open spaces and environmentally sensitive development.

She advises Kahnweiler’s group to begin meeting with residents and all the local decision-makers, including the school board, park district and others, to get their feedback on what the Green Acres site could become.

Kahnweiler did not respond to a message seeking comment.   

“Very often, local developers will take the initiative to meet with residents and hold public forums to get input, and we definitely encourage that,” Ciesla said. "We can’t compel them to do anything, but we’re ready to listen when they’re ready to talk.”

Whatever the challenges in completing deals, golf courses are continuing to attempt sales. Local courses on the market include the Joliet Golf Club in southwest suburban Joliet, which permanently closed more than one year ago, and Big Run Country Club & Banquets in nearby Lockport. In addition, the Coghill family, which for decades has owned Silver Lake Country Club in southwest suburban Orland Park, put it up for sale this February. 

"The family just decided it was time to step away," Amy Coghill said. "We don't have a development partner yet, but we are looking at all options." 

Charnas said some buyers are still eager.

"We will have two more deals announced in the next 30 days in the Chicago market."