Summerlin developer: Timing right for high-end community

Phil Levine

Thursday, Jan. 20, 2000 | 11:19 a.m.

Bill Bone's 12-step program for real estate success may appear simple, but he says it was more than three decades in the making.

"We did our first project in 1963, and we've learned a lot since then," said Bone, founder and chief executive officer of developer Sunrise Colony Co. "When we started out, we did a range of projects including high-rise offices and regional malls.

"But in the 1970s we built our first golf course community in Southern California, identifying a specific market niche that was unfulfilled. That's a key step in developing successful projects."

Sunrise initially established its golf course community credentials constructing high-end homes in the vicinity of Palm Springs, Calif.

Over the last quarter century, the company has developed 14 country club and resort projects in California, Texas and Nevada.

Now headquartered at 9901 Covington Cross Drive in Las Vegas, the company employs more than 500 people, and has built almost 10,000 country club community homes.

In Las Vegas, Sunrise's most recent effort to meet market demand can be seen at the Red Rock Country Club golf course community.

Located at the end of West Sahara Avenue -- adjacent to Red Rock Canyon -- the development spans more than 700 acres and will have more than 1,000 homes at build-out.

To date, about 360 homes have been sold at the development. Also on tap are two Arnold Palmer-designed golf courses, one of which is now open.

Homes at the Red Rock project range in price from just under $300,000 to over $1.5 million.

Like thousands of other transplants, Bone recently relocated to Las Vegas from California. Upon completion of his new Red Rock home, he will also be among those residing in the canyon's shadow.

Reflecting his company's real estate experience, Bone's 12-step success program includes straightforward advice such as "have sufficient equity to carry the project through fruition" and "select the best location in comparison to competition."

However, Bone cautions that timing is also a critical factor when determining whether or not to proceed with a development.

He cites the Red Rock project as "a great case study."

"When we were first approached by the Howard Hughes people (owners of the Summerlin property) about buying some land in Summerlin, we realized the timing wasn't yet right," he said.

"About five years later (in the mid-1990s), I got another call from them, and it was only then the market and timing seemed right."

Despite some frustration over the costs involved in building the Red Rock community -- "everything cost more than we thought it would" -- Bone said sales are on pace for the development.

"Although we're a little behind in closings, we're pretty much on track for sales," he said. "It's going to take five years to reach build-out."

Bone said lessons learned by the collapse of the California real estate market in the early 1990s illustrate the volatility of the development industry.

"That's why one of the 12 steps to success emphasizes the importance of not doing projects with low profit margins," he said. "This business is hugely capital-intensive, and your profit margin is your insurance policy against project failures."

The volatility of the development industry is also reflected in the investment community's varying view of the real estate sector.

"We were looking at doing an IPO (initial public offering) this year, but Wall Street currently doesn't put much value on real estate," Bone said. "That means we've put our (IPO) plans on hold for now."

Unlike many master-planned communities, golf course developments target primarily upper-income Americans.

However, a record-breaking stock market means the image of the wealthy retiree crossing a gated community in his golf cart is quickly becoming an anachronism.

"Today, the average age of our customer is about 48," said Bone. "I'd say the average customer of ours is a business owner you'd find in the Yellow Pages. That is, professionals such as doctors and lawyers or company owners of multiple retail outlets."

In recent years, spurred on by investment wealth, that target market has grown in size.

"You can't believe how many people have a net worth of more than $2 million," said Bone. "The average income of our buyer today is around $250,000 per year. At Red Rock, those are mainly people who both live and work in Las Vegas.

"These days, that's really the market for our kind of product."