A master-planned community is a large-scale residential neighborhood with a large number of recreational and commercial amenities, such as golf courses, tennis courts, lakes, parks, playgrounds, swimming pools, and even stores and restaurants. Some master-planned communities may have schools, office parks, large shopping centers and other businesses.
Why Invest in a Master-Planned Community?
A master-planned community is a unique type of real estate business model with some pretty appealing advantages for long-term investors.
In a nutshell, MPCs are designed to create a cycle of value creation. And while there is certainly some variation among communities, the general idea looks something like this:
- The MPC’s developer acquires thousands of acres of empty, but usable, land.
- The developer initially sells a small portion of the land to homebuilders, who create residential neighborhoods.
- These neighborhoods create demand for commercial properties. For example, a convenience store or car wash could do quite well if it’s the only business of its kind that is close to a new neighborhood. So, the developer either builds these properties itself or sells land to commercial developers.
- The existence of these amenities makes the remaining land more valuable, so the MPC developer sells some more of the land to homebuilders at the now-higher valuation.
- This cycle repeats, and as the population grows, so does demand for increasingly valuable amenities. Some larger MPCs have office towers, sports arenas, and large shopping districts. It can take several decades for an MPC to be fully built out.
Here’s the key point. With full control of the land in essentially a small city, the MPC developer has better control of supply and demand in the area, which is a key advantage when trying to unlock the value of buildable land. In other words, when a homebuilder decides to develop a new neighborhood in an area, they don’t have any control over the development of commercial properties or other competing neighborhoods in the vicinity. An MPC developer does and can use this control to produce excellent returns over time.
Have questions about commercial real estate or property investments? Contact MHW Commercial Real Estate today at 281-651-4898.
Sean brings his passion for Real Estate and Customer Service together at MHW focusing on Retail Landlord/Tenant Rep and Investment Sales. Sean uses his background in Sales, IT, and Project Management to provide value to his clients as they navigate their business needs.
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Jeff Williams joined MHW in early 2016 to focus on commercial real estate. Prior to coming to MHW, Jeff worked for a year as a residential real estate agent with Ruth Stultz & Company, managing all aspects of the transaction for his clients, from marketing to closing, serving buyers, sellers, and tenants across Houston.
As a new member of the commercial real estate industry, Chase Lowe looks to provide a new outlook to the MHWRE’s vision. His involvement at the firm started as an intern after meeting Jody Czajkoski at a community event. As his knowledge and experience began to grow, his love for the industry began to grow as well. After successfully completing the Texas Real Estate course and exam in early 2016, he became a full-time member of the team. Chase brings a fresh, positive outlook to the commercial real estate market and looks to continue to expand his knowledge in all aspects of the industry.
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Mark Windell began his real estate career at age 18 in the Lake Conroe area while attending college. Due to Mark’s leadership attributes and integrity, he was quickly promoted to management by the age of 21 where he was responsible for training and leading a top producing national real estate sales team.
Dharamdas “Dan” Nankani is an experienced Texas Real Estate Broker. He received his BA degree from the University of Texas at San Antonio, in Real Estate Finance and Development. Dan obtained his Texas sales agent license in 2009 and his Texas Brokers license in 2011.