NEWS - Commercial Real Estate

By Catherine Rendón
SBJ Staff

The last two years have been difficult for both commercial and residential real estate in the Southeast as well as the rest of the country. Two prime examples are the recent availability of two jewels in the Lowcountry barrier island range: mainly Daufuskie Island, S.C., (1 nautical mile from Hilton Head and 12 nautical miles from Savannah) and the posh Sea Island Resort in Glynn County.

These two islands offer strong contrasts of the possibilities and expectations of prime real estate potential in the region. For years, Sea Island has been the premiere resort catering to exclusivity and seclusion. The expenses it accrued in renovations for the G-8 Summit that was held there in 2004 contributed to its eventual bankruptcy.

Oaktree Capital Management LP, Avenue Capital Group, the Anschutz Corporation and Starwood Capital Global have joined forces to purchase the Sea Island assets. This merging of interests almost doubled the sale price by $15 million to $212.4 million, thus doubling the pay-out pool from $3 million to $6.2 million. The consortium not only saved Sea Island but allowed Bill Jones III, the third generation of his family who has run Sea Island, to remain on as chief xxecutive. Furthermore, existing club memberships will be honored and 1,400 workers retained. The resorts and golf courses will also be kept open.

More recently, Daufuskie Island Resort & Spa tried to replicate a formula that was pioneered in the Lowcountry, principally, the Golf resort with sea views. The idea of exclusive retreats of leisure for escaping the cold winters of the north were first tried out at the Jekyll Island in the early 1900s with it’s “Millionaires Club” made up of early tycoons of U.S. industry and business.

Gayle and Bill Dixon, owners of the Daufuskie Island Resort & Spa declared bankruptcy in January 2009. Despite pristine beaches, golf courses, an equestrian center, tennis courts, club amenities and sea front lots, Daufuskie has not succeeded in attracting any investors. Initially Montauk Resorts showed interest in acquiring Daufuskie for $49.5 million, but the deal fell through. Since then, J.P. King Auction Company of Gaddsden, Al., stepped in to handle the property.

An auction was set for late October with a minimum allowable bid of $16.5 million. Although the space was crowded no one showed up with the required $1 million cashier´s check required to bid in the auction. Communications spokesperson for J.P. King, Caley Newberry, told the SBJ that ¨the trustees for court were selling the property in its entirety and that most people were not interested in all all-inclusive package, rather in buying parcels.”

It is not yet clear whether Daufuskie Island Resort’s 5,000 acres will be broken up and whether J.P. King will continue its involvement with this property. It should be noted that the land in question, that of the resort, makes up one fifth or less of the mass of the island. Over the last five years a thorough document known as the Daufuskie Island Plan has been assembled with governmental agency pointers on how this land could best be developed as well as architectural parameters.

Long time Sea Pine resident and observer of the local real estate scene, architect, Joe Hall, offered his view of future possibilities for Daufuskie. Taking a cue from Charles Fraser, the celebrated visionary and founder of Sea Pine Plantation on Hilton Head, Hall believes that a new resort island model is required. The covenanted gated communities with golf courses and activities to appeal to intergenerational family groups that Fraser pioneered were newsworthy and gained him recognition from the American Institute of Architects.

Hall feels the barrier islands and the coasts of Georgia and South Carolina “have been the land planning laboratory for resort communities in America.” Lowcountry architectural details known as the Hilton Head Style, are now the norm within an environmentally aware approach are now the norm.
Fraser saw the importance of protecting wildlife and capitalizing on nature’s bounty. Hall feels that with an island as untouched as Daufuskie, new avenues for establishing an innovative standard, one in where more ecologically minded living is possible. Daufuskie’s relative isolation, far from zoning codes and crowding, offers the possibility for creating a series of sanctuary-inspired spaces. Daufuskie’s East side, facing the Atlantic, tried to incorporate the Sea Pines blueprint, but it failed.

“For one,” Hall told the SBJ, “the whole concept of cars, and even golf carts, as a means of transportation on an island of this scale, has to be rethought.” Hall believes that ecotourism is the next step for preserving the still unspoiled nature of Daufuskie and its surroundings.

While Daufuskie Island’s future remains unknown, Sea Island was sold to a coalition of investors and will continue to follow a well-known formula. We have yet to see if Daufuskie’s future course will make a textbook example of the topic of an upcoming Scad symposium (February 2011) on “Sacred Places” and protect the environment that Pat Conroy so aptly describd in his book about this island in “The Water is Wide.”