When clubs and pubs have surplus land that is not generating revenue or adding to the operations of the organisation, it makes sense to look at alternate uses that will diversify revenue and compliment the operational activities of the club or pub.
We turned to Anna Porter of Suburbanite Asset Advisory to provide some hits and misses that are solid examples of what works and what doesn’t, and most importantly – why!
“Some of the misses we have seen usually come back to the club or organisation not understanding or knowing their market well enough,” says Mrs Porter. “When a club embarks on a development, they often skip over the market research stage or use a local real estate agent who is a friend of a board member. This is just not a robust enough process and can lead to a huge failure in how the end-product performs, and if it even achieves the goals it was set out to achieve. All too often we see local community based organisations using one of the big tier development firms to provide the advice on the project, and in many cases the market research component is self-serving to that development firm so they can land the construction project as that is their profit centre. They provide a few flashy reports on the market outlook to convince the board it is a good option, and then forge ahead with a project that just isn’t the right fit for the club, the market or the community in the area. This leads to huge problems at the other end of the project” says Porter.
“A prime example of a ‘miss’ that we see all too often, is clubs planning to develop child care centres on their surplus land. Clubs need to consider not only the profitability of such a development, but also the purpose. How does it fit with their organisational identity, operationally and their reputation within the community? Putting children close to gambling and alcohol usually leads to community uproar and bad press for the club. Profit v’s purpose can be a hard decision for the board to make and agree upon at the early stages of a development or project, but it is a critical one.” Says Mrs Porter.
“It’s not just the purpose and community fit that makes this type of development a miss. A national report by Community Early Learning Australia, (CELA) recently surveyed 463 providers across the country and found two of every three services reported more vacancies since 2015 and many services had reduced waiting lists or no waiting lists for new applications. This is stark contrast to reports of extensive waiting lists in 2015. Some facilities were even found to be offering incentives to entice new parents with $50 gift vouchers and the like.
This is a direct result of oversupply of child care facilities throughout the capital cities, resulting in a downturn in revenue while expenses like insurance costs and staffing costs are increasing in the sector. This is not a venture you want to be embarking on in 2019” says Mrs Porter.
“The hits are often found in the retirement living sector,” claims Anna Porter. “There have been a number of clubs looking to push into this sector and in the right market it can be a profitable move. Wollongong Golf Club were well ahead of the market when they pushed into aged care back about a decade ago. They first identified the land surplus to their needs and with their valuable location on the beach front decided to develop a retirement living and aged care facility, plus services holiday units as part of their group.” Continue Porter.
This is just one example of a well thought out and well-planned strategy for the club, according to Anna.
360 Degrees on the assets in a nutshell – Anna Porter, Suburbanite Asset Advisory
1. Do thorough market research and analysis before you start the project and don’t use a company that will offer self-serving reports to win the construction contract
2. Understand your profit v’s purpose position & set up that framework
3. Joint Ventures (JVs) come with their own set of risks. Developer v’s industry specialist will result in very different outcomes. Ensure there is an alignment of core values
4. Manage execution risk by selecting the right builder or developer with robust due diligence