St. Joe’s Stock and the Town‑Building Model: A Long‑Term Analysis
St. Joe (JOE) is a timber company in the Florida panhandle that has pivoted to building unconventional real estate communities on its land. It is well known in value investing circles. Their strategy differs from the approach of the large home builders in the US, including Lennar, DR Horton, Pulte, and Related Companies. If you have ever been to suburban San Diego, you’ve seen the master-planned communities that are the bread and butter of real estate development—lots of condos, surrounded by a fence, which in turn is surrounded by a desert. If you want to get groceries, watch a movie, or do almost any activity, you must get on the highway for a couple of exits. While San Diego takes this to the extreme, this is what the traditional residential real estate master planned communities look like, regardless of whether you are in Massachusetts or Texas–a single highrise or a collection of condos in a fenced-in lot.
In the 1990s, St Joe pivoted to developing its vast land holdings into real estate. Five or six companies in the NYSE have large amounts of land and plan on turning it into real estate. This is in addition to the traditional home builders mentioned above. Examples include Pure Cycle Corporation (PYCO) and Tejon Ranch (TRC), which are closer comparables to St Joe than the homebuilders, but also conventionally develop their land. St Joe has been a battleground stock for years, as bulls argue it’s trading at a fraction of the value of its land holdings, and bears argue that those land holdings are marsh and forest. Notably, Bruce Berkowitz joined the board as an outside investor with a large holding in the company in 2010. In 2015 David Einhorn covered his short on St Joe’s arguing that its land was crap and not suitable for development. I’m not here to discuss St Joe as a stock. I will not discuss valuation, for example. Rather, I want to story tell and explain St. Joe’s pursuit of building livable towns compared to traditional residential real estate development.
New Urbanist town builders want to build master-planned communities with vibrant public spaces intermingled with residential areas. There will be stores, theatres, and gyms, and the developer could also attempt to bring in novel and interesting events. You could hear Jane Goodall talk about chimps or Michio Kaku about black holes. You could have soccer fields and ecological sanctuaries for exploring and hiking. Perhaps there will be public land to walk your dog or throw a football around. Some areas may be car-free, with the extra space allocated towards walkable footpaths, denser stores and housing, increasing the connection between residents. All of this will be mixed with residential spaces. The upside is that people are enthusiastic about living in these communities. If you establish a vibrant public square with unique events, people will pay double or triple the pre-development real estate price. The main issue is the upfront cost of developing the land in this way, with commercial real estate being a larger risk than just pure residential buildings. Despite this, the New Urbanist approach has monetary advantages that place it on par, if not superior to, traditional residential real estate development.
For example, in Seaside – often cited as the first New Urbanist town and the template St. Joe looks to – cottage home prices jumped from about $50,000 in 1984 to $500,000 by 2000. Over its first decade, Seaside’s land values soared roughly 292% above the U.S. average rate of appreciation. By the mid-2000s, homes in Seaside were selling for $1.4 million on average, reflecting how early buyers saw tremendous gains by holding property for 10+ years. Other communities have sprung up. Serenbe, founded in 2004 in a rural area near the Atlanta airport, now boasts a median home price of around $1.2 million after two decades of development, indicating substantial appreciation from its early years (when homes were priced in the mid-six figures). Even newer projects are seeing significant gains – a blog post discussing Seabrook’s marketing material (a New Urbanist beach town in Washington) claims home values have risen ~15% year-over-year since 2004 on average, an aggressive figure that underscores the premium buyers place on walkable, village-style communities. While 15% annually may be optimistic, there’s no doubt Seabrook’s property values have climbed sharply as the town evolved from a remote gamble into a sought-after coastal haven. Homes are now selling in the $1–3 million range, even if it’s a 3-hour drive from Seattle. Many of these communities are located in rural areas, and yet the home prices are $1 million+, indicating the demand. Overall, the evidence is clear: thoughtfully master-planned towns emphasizing public spaces and walkability tend to perform at least on par with conventional developments in long-term appreciation when given a 10+ year horizon.
The name of the game is to slowly build out the town. In the first years of building, there will be less funding for the amenities, and house prices will be lower. However, as the amenities develop–a feedback loop where amenities attract buyers and buyers provide funds for building amenities–home prices will appreciate. Thus, it requires 10, 20, or 30 years to make outside gains as the home values will be compounding at a high rate only in tandem with the development of amenities, and the cash flow will be backloaded. This is even more difficult for St Joe as they have, according to some, perhaps too optimistic, accounts, something like $9 billion in land, and there is not enough demand or production to develop and sell all the land at once.
Generally, the 20+ year horizon also means the duration is too long for the average real estate fund. This is one reason that most still build conventionally. The second reason is that the nontraditional nature of New Urbanist development and the lack of more than a handful of finished projects means that banks are hesitant to lend. St Joe's returns may be even more impressive than other town builders because the company overcomes this second problem as a large public corporation that can issue bonds and stocks and take out bank loans.
Nevertheless even with these disadvantages, many New Urbanist returns are comparable to the traditional condo building strategy, taking into account the longer payback period. Investors with a traditional understanding of real estate development and life cycles are misunderstanding St Joe’s approach. It has been 20 years, and some of the initial New Urbanist developments St. Joe’s has been building are generating significant cashflow, but as other New Urbanist developments show, the cashflow is backweighted over 20-30 years, so current developments will take time to appreciate. At the same time, St Joe still has significant undeveloped land, and if they use the same strategy, it will be many years before the returns that line up with the amount of land it holds become apparent.
Town-Building Communities and Financial Performance
Long-Term Appreciation – Planned “town-building” communities like Seaside (FL), Serenbe (GA), and Seabrook (WA) have demonstrated robust long-term real estate appreciation.
Developer Profits & Yields – Developers of these town-style communities often realize healthy profits by creating an environment that commands premium pricing. St. Joe’s own WaterColor development – a New Urbanist resort town near Seaside – was recognized as a “highly profitable” project for the company. In the early 2000s, WaterColor won a prestigious Urban Land Institute award for its design and saw strong luxury home sales, validating St. Joe’s pivot toward Seaside-style placemaking. By curating attractive town centers, recreational amenities, and design codes, developers can sell lots and homes at higher price points than in generic subdivisions. These higher upfront sales translate into solid margins. Beyond sales, rental yields in such communities are often strong as well, especially in resort towns. Many buyers rent out homes to vacationers, generating income and economic activity. In Walton County (FL) – home to Seaside, WaterColor, Alys Beach, etc. – two-thirds of all county revenue in 2019 came from South Walton vacationers. Affluent tourists flock to these picturesque towns (the average visitor's household income is around $250K), supporting high rental rates and occupancy. This tourism draw creates a virtuous cycle: rental yields for owners remain attractive (with homes often booking at top dollar), and local businesses thrive, which in turn bolsters property values. In Seaside and nearby 30A communities, vacation rental demand is so strong that it effectively underpins year-round economic activity – a noteworthy contrast to conventional second-home subdivisions that might sit empty off-season. Overall economic activity in these town-built developments tends to flourish as they mature. New shops, restaurants, and services open to serve both residents and visitors. Serenbe, for example, has grown to 40+ independent retailers and businesses on-site (including dining, arts, and wellness enterprises), creating jobs and a tax base in what was once rural land. Similarly, Seabrook now hosts about 25 businesses (restaurants, bakery, grocery, etc.) and even attracted a new public school and wellness clinic as the year-round population grows. These indicators – rising home values, solid rental income potential, and expanding local commerce – all point to strong long-term economics for well-executed town-building projects. Importantly, the full financial benefits often accrue over a decade or more as the community reaches critical mass.
Long-Term Investment Horizon (10+ Years)
Patience and Compounding Value – Town-building developments require a long-term vision, and investors (whether buying property or stocks like St. Joe) must often wait 10+ years to see the strategy fully bear fruit. This is an even longer horizon for St. Joe due to the sheer amount of land it holds. Many of the exemplary communities took decades to develop and appreciate. Seaside’s founders began in the early 1980s, and only decades later can one truly appreciate the compounded value – early lot buyers saw exponential gains, and today Seaside is essentially built out with world-renowned status. Serenbe’s creator, Steve Nygren, often emphasizes that he’s “two decades into” building Serenbe and it’s still a work in progress. As of 2018 (about 14 years in), Serenbe was only ~15% built out with ~650 residents, yet by 2024, it surpassed 1,000 residents and continues to expand. Investors who bought into Serenbe early and held on during its nascent years have seen property values climb as the community blossoms. Likewise, St. Joe’s large-scale projects in Florida illustrate this long game: the company spent years entitling tens of thousands of acres (via sector plans and development agreements) with the expectation that build-out could take decades. The WaterSound region in Walton/Bay Counties, for instance, has been carefully master-planned for phased growth. As of 2024, St. Joe has over 3,500 home sites in various stages of development across its Walton County communities, ensuring a pipeline that can fuel sales for many years to come. This gradual absorption is key to maintaining pricing power and steady appreciation. Notably, the biggest gains often occur after the community reaches a tipping point of desirability – e.g. when a critical mass of amenities, neighbors, and businesses make it a self-sustaining town. Investment horizons of 10, 20, or even 30 years are thus appropriate for true town-building models. Short-term fluctuations (housing cycles, recessions) will occur – e.g. Seabrook had slower, but still robust, sales during the 2008 downturn and Las Catalinas (Costa Rica) was essentially paused during the 2007–09 crisis– but the long-run trend for well-located, well-designed communities has been strongly positive. As one Seabrook investor noted, the developer “has done a very good job of managing their growth, building out their commercial areas, and having things to do there year-round,” which helps sustain ~double-digit annual appreciation over the long haul. For stock investors in a landholding company like St. Joe, this provides a road map where real value creation may happen gradually as raw land is converted into vibrant communities. A 20+ year investment horizon aligns with the timeframe needed for St. Joe’s town-building strategy to translate into higher earnings, land values, and stock price appreciation.
Case in Point – 30A/Florida Panhandle: St. Joe’s experience in Walton County underscores the payoff of patience. Developments like WaterColor (launched ~2000) did not immediately sell out overnight – they were built in phases and took years to fully establish. But by staying the course, St. Joe was able to sell all 1,140+ planned residences in WaterColor at premium prices (the final home sites sold out by the mid-2010s). Property values in WaterColor and adjacent communities have since multiplied, riding the wave of 30A’s rise as a luxury destination. An early WaterColor cottage owner likely saw enormous appreciation by holding for a decade-plus, similar to Seaside’s trajectory. St. Joe’s stock performance has mirrored these long cycles – it surged in the early 2000s real estate boom (peaking near $80/share in 2005), plunged during the 2008 crash, and then gradually recovered as development resumed. In recent years, as Northwest Florida’s growth accelerated, St. Joe’s stock climbed again, hitting around $64 in 2024 (its highest in ~15 years) before settling in the $40s–$50s. Long-term holders who weathered the downturns have seen the value of St. Joe’s underlying assets (land and developed properties) steadily increase, even if the stock price journey was bumpy. This reinforces that town-building is not a quick flip strategy – it’s about creating long-term, appreciating assets. Investors with the patience to look 10+ years out can reap rewards that significantly outpace broader market or conventional real estate returns, much as the early believers in Seaside or Serenbe did.
St. Joe’s Projects vs. New Urbanist Town Models
Alignment with Town-Building Principles – The St. Joe Company’s portfolio reveals a mix of development approaches, some closely aligned with the town-building (New Urbanist) model and others more conventional. On one hand, St. Joe has been involved in exemplary walkable communities on the Florida Gulf Coast. WaterColor (near Seaside) was designed with a village center, community parks, and environmental preservation in mind – a textbook New Urbanist resort town that earned acclaim for its planning. WaterSound Beach (another St. Joe project on 30A) similarly features pedestrian boardwalks, a town center, and strict architectural codes to foster a cohesive beach-town feel. These developments prioritize public spaces (e.g. WaterColor’s community greens and beachfront walkovers) and encourage walking or biking to local amenities. In essence, WaterColor/WaterSound replicated Seaside’s DNA under St. Joe’s ownership, and the market responded: WaterColor became one of St. Joe’s most successful high-end communities, and resales today command top dollar (vacant lots in WaterColor have recently been listed around $1 million due to scarcity). St. Joe’s newer “town center” projects also echo this model. For example, Watersound Town Center now includes a Publix grocery, shops, and services in a walkable hub aimed at serving the surrounding Watersound Origins community. By integrating retail and daily needs into the neighborhood, St. Joe is attempting to create a self-contained town core rather than a pure bedroom subdivision. Additionally, St. Joe has partnered on lifestyle-centric projects like Latitude Margaritaville Watersound, a 3,500-home active adult community with its own “town square” and amenities. While Margaritaville is a private, age-restricted development, it still emphasizes community gathering spaces, entertainment, and walkability (via golf-cart-friendly design) in a way that nods to town-building principles.
Departures from the Model – On the other hand, not all of St. Joe’s developments mirror the Seaside template. The company also engages in more traditional suburban development when appropriate. In the wake of 2018’s Hurricane Michael, St. Joe launched several fast-track communities in Bay County (eastern Panama City area) – e.g. College Station, Park Place, Titus Park – to meet urgent housing demand. These are largely conventional subdivisions (single-family homes on standard lots) rather than intricately planned villages. They lack the full mix of uses and “downtown” feel of a Seaside or Serenbe, focusing instead on quick delivery of rooftops. St. Joe’s strategy thus balances high-end placemaking with volume building. Even within Walton County, the company’s large master plans (Watersound Origins, Watersound Camp Creek, etc.) are being built in phases that often involve selling parcels to national homebuilders like Kolter Homes. Those builders may put up fairly standard homes, meaning some parts of Watersound might feel more like typical residential enclaves (albeit with access to trails, golf, and future town centers) rather than a tightly integrated town. The density and diversity of uses in St. Joe’s projects also tend to be lower than iconic town-building examples – for instance, Serenbe clusters homes alongside shops, restaurants, a farm, and even an inn within each hamlet, creating an organic village vibe, whereas Watersound Origins currently is primarily residential with amenities and a future town center planned rather than an existing bustling village core. This makes sense as St Joe holds much more land than other New Urbanist developers and can afford to build lower-density communities. Trilith, GA (formerly Pinewood Forest), a newer town-building venture near Atlanta’s film studios, exemplifies a comprehensive approach that St. Joe could aspire to – it spans 235 acres with 1,400 homes of varied types (from micro-cottages to estates) plus a robust Town Centre of restaurants and shops. Trilith’s success has reportedly boosted property values and spurred local investment around it. St. Joe’s current communities, while thoughtfully planned, may not yet reach the same level of mixed-use intensity or cultural programming.
Scale and Vision – One key difference is visionaries vs. corporate strategy. Many celebrated town-building communities were spearheaded by individual visionaries or dedicated town-building firms: Seaside by Robert Davis, Las Catalinas by Charles Brewer, Serenbe by Steve Nygren, Seabrook by Casey Roloff, etc. These developers often pour their hearts (and significant personal capital) into creating a particular town character. St. Joe, as a public company, historically focused on land monetization and shareholder returns, which can lead to a more cautious, phase-by-phase approach. That said, St. Joe’s leadership in recent years has increasingly embraced the “placemaking” narrative. The company’s website and investor materials emphasize “thoughtfully planned destinations” and showcase initiatives like new hotels, marinas, and town centers that complement its residential projects. This suggests St. Joe recognizes the added value of true community-building (beyond just selling lots). In practice, St. Joe’s most successful projects do align with town-building models – the 30A communities (WaterColor, WaterSound Beach) and the emerging Watersound Origins/Camp Creek area all integrate natural preservation, walk/bike infrastructure, and central gathering places. The differences lie in execution speed and perhaps cohesiveness: A smaller private developer might build a whole village center all at once to set the tone, whereas St. Joe often develops infrastructure and amenities gradually. Nonetheless, as St. Joe continues to partner with experienced town builders, and retains huge land holdings, it is in a unique position to create multiple town-like communities over time. The big question is whether St. Joe will fully commit to the highest aspirations of town-building – such as diversity of housing, arts/culture, and truly walkable mixed-use design – or remain somewhat in the safer lane of upscale master-planned subdivisions.
Profitability Outlook for St. Joe’s Stock Under a Town-Building Strategy
Current Strategy and Earnings – St. Joe’s recent strategy has focused on leveraging its vast land assets in Northwest Florida to generate recurring income and capital appreciation. The company is diversifying its revenue streams – moving beyond just selling home sites to also owning hotels, clubs, marinas, retail centers, and apartments that produce ongoing cash flow. This shift is complementary to a town-building approach since a vibrant town can yield many income sources (hospitality, retail leases, etc.). This is also an advantage over a residential only approach, as the real estate square footage is diversified. In 2024, St. Joe’s revenues were about $402.7 million with earnings of $74 million, reflecting steady growth as development activity picked up. Thus far, signs are positive: demand for homes in its key communities remains strong (Walton and Bay Counties are among Florida’s fastest-growing areas). As noted by a St. Joe executive, in-migration from around the country is driving a “high quality of life” narrative that makes it easier to sell homes in their developments. If St. Joe can essentially replicate the “Seaside effect” across its holdings, the long-term payoff could be substantial. That means fostering developments where home values and rents rise consistently, providing both one-time sale profits and recurring revenue. For instance, building out the Watersound Origins area into a fully functioning town (with schools, healthcare, retail, and thousands of residents) could unlock enormous value on St. Joe’s balance sheet: land that was once timberland valued at a few thousand dollars an acre can be sold as finished lots for 10–20× that amount, and the company can retain pieces (like a town center or resort) that generate ongoing income.
Expected Returns vs. Exemplars – Can St. Joe’s stock deliver returns comparable to an investor owning property in Seaside or Serenbe? In some ways, yes – investing in St. Joe is akin to owning a basket of developable “town” sites in Florida’s Panhandle. The long-term returns of Seaside’s real estate (which appreciated manyfold over 40 years) have been spectacular, and St. Joe’s challenge is to translate such appreciation to the corporate level. Notably, St. Joe’s land book value is far below market value due to historical cost accounting, meaning successful development can create outsized growth in net asset value. The company’s focus on income-producing assets also means that as these communities mature, St. Joe’s earnings could snowball (for example, hotels in its resort towns are often fully occupied in peak seasons, and club memberships are growing with each new resident). Over a 30+ year span, shareholders could benefit from both asset appreciation and cash flow expansion, analogous to how an early property investor in a New Urbanist community benefits from rising home equity and rental income. It’s important to recognize that St. Joe’s stock won’t exactly mimic real estate values – it’s subject to broader market sentiment and corporate decisions (e.g. share buybacks, dividends, etc.). However, management appears committed to long-term value creation, even initiating a dividend and buybacks as of 2024, signaling confidence in sustained profitability. If St. Joe continues to execute well, the stock’s returns over the next decade could mirror the steady compounding seen in places like Seaside. The caveat is execution risk and market cycles – as a developer, St. Joe is exposed to housing demand swings. But its strategy of building desirable towns rather than cookie-cutter sprawl should provide resilience. In fact, high-quality, walkable communities often hold value better in downturns and recover faster, because their scarcity value remains (people will wait for a WaterColor home, for instance, more so than for a generic subdivision house). By aligning its projects with what today’s buyers want – walkability, lifestyle, and community – St. Joe is positioning its stock to potentially deliver strong long-term returns that parallel the success stories of Seaside, Serenbe, and other town-building ventures.
Developer Insights and Case Studies
To understand the ethos and potential of town-building developments, it helps to hear from the developers who pioneered them:
Steve Nygren (Serenbe, GA) – Nygren famously said, “I wanted to build a town, not a development.” Rather than a sterile subdivision, he envisioned a place with the character of historic villages: varied architecture built over time, charming streetscapes, and a focus on human-scale design. He spent years persuading neighbors and officials to support Serenbe’s plan, which clusters homes into hamlets surrounded by preserved countryside. Nygren’s insight is that people will pay a premium for a built-in sense of community. Serenbe’s homes are expensive because the community fills an unmet and in-high-demand niche – a place that offers a healthier lifestyle and sense of community. Interestingly, he notes that many of Serenbe’s planning principles (like edible landscaping, narrower pedestrian-oriented streets, and natural stormwater systems) actually cost less to implement than conventional suburban infrastructure. In other words, building towns can be done economically, yet the end product is valued more highly by the market. This philosophy could inform St. Joe’s approach: invest in thoughtful design up front to create places people love, and the returns will follow. Nygren also refutes the idea that these communities are just elite “gimmicks.” He believes the model can scale and even be made more affordable if adopted broadly. The key takeaway from Serenbe’s creator: focus on place-making and community building, and you tap into a deep market demand that conventional development isn’t meeting.
Casey Roloff (Seabrook, WA) – Roloff set out to build a new town from scratch on the rainy Washington coast in 2004, directly inspired by Seaside. Fast forward ~20 years, and Seabrook is thriving – now planning to double in size with 1,300 more homes and two additional village centers (including a boutique hotel). Roloff’s experience underscores the long-term commitment needed. In an interview, he noted that only 15% of Seabrook’s 600 homes were full-time occupied initially, but as more amenities (school, medical clinic, grocery, etc.) come online, he aims to double the full-time residency in the next 5–10 years. This illustrates how a development can evolve from a vacation-home resort into a more full-fledged town over time, increasing its economic vibrancy. Roloff’s goal is explicitly to “refocus town-building away from suburban sprawl”, proving that even in the private sector, developers can champion anti-sprawl principles and succeed. Seabrook’s success has even emboldened Roloff to start new towns (he’s acquiring land in Sequim, WA for another 600-home town). His journey suggests that once a template is proven, it can be replicated profitably. For St. Joe, which controls tens of thousands of developable acres, this is an encouraging notion – one great town can seed another, creating a portfolio of sought-after communities.
Charles Brewer (Las Catalinas, Costa Rica) – Brewer, an Atlanta tech entrepreneur turned town-builder, provides a perspective on both the aspirations and challenges of such projects. He founded Las Catalinas as a car-free, walkable beach town in Guanacaste, Costa Rica. Brewer chose the site in 2006 for its stunning natural beauty – 1,200 acres of hills and a crescent beach – and envisioned an eco-town with a boutique hotel and homes for affluent international buyers. Early on, the project struggled: launching in 2007 just before the global recession, and by 2012 only 10 houses had been built as financing fell through and an environmental lawsuit halted new construction. This highlights a risk: town-building developments are capital-intensive and can be vulnerable to external shocks (financial crises, regulatory hurdles). However, Brewer persisted. Over the past decade, Las Catalinas has gained momentum – it opened two hotels and dozens more homes, and as of 2024, it is “gearing up for unprecedented growth”. New commercial districts (La Rambla) and civic amenities (a central park, sports fields) are coming online. Brewer is enthusiastic about the transformation, stating “people don’t yet fully appreciate how transformative these developments are going to be… [the new amenities] will create a world-class main street experience… making living at Las Catalinas better than ever”. The key insight from Las Catalinas is that vision and persistence can eventually overcome early setbacks. For St. Joe, which has a strong balance sheet and patience, a temporary slowdown in one project isn’t fatal as long as the long-term vision is sound. Brewer’s project also underscores the importance of timing and local partnerships: St. Joe often partners (e.g. with hotel operators or homebuilders) to share risk – a prudent move given Brewer’s difficulties when his initial hotel partners backed out. Now that Las Catalinas is flourishing, it validates the underlying concept: an international market exists for walkable resort towns, and economic activity will follow – the town is attracting global investors and expanding its commercial base.
Chautauqua, NY & Others – Not all town-building communities are new. Historic examples like Chautauqua, New York (established in 1874 as an education-centered summer town) show that place-based communities can endure and prosper for over a century. Chautauqua’s mix of culture, education, and recreation created a long-lasting real estate premium – cottages there have been passed down generations or sold at values reflecting the town’s unique cultural capital. Modern developers often study such precedents. Likewise, communities associated with the National Town Builders Association (NTBA), such as Habersham (SC) or I’On Village (SC), have documented strong market performance by following traditional town planning. NTBA developers emphasize human-scaled design and report that their projects often outperform nearby conventional developments in price appreciation and resident satisfaction. In short, when done right, town-building is both profitable and sustainable. As one industry podcast noted about Trilith, GA (an NTBA-style project backed by major investors), its success has led to increased property values and a positive impact on the surrounding area, benefiting not just the development itself but its whole region. This broader uplift is a powerful argument for St. Joe to lean into town-building – it can create a halo effect on the company’s other holdings (for example, a thriving Watersound town can elevate demand in all of Bay and Walton County, where St. Joe owns lots of land). Alternatively, as mentioned above, the company might have too much land in one place and not enough demand for New Urbanist developments on the Florida panhandle.
Regulatory and Financing Challenges
Financing & Investment – Building a town from scratch is capital-intensive. Upfront costs for infrastructure (roads, utilities, civic amenities) come long before revenue from home sales or leases. This creates financing challenges that require deep pockets or creative structures. Some of the noted communities were funded by the founders’ wealth – e.g., Las Catalinas had a hedge-fund billionaire partner investing millions, Alys Beach was bankrolled by the Stephens family fortune, and Serenbe was privately financed by Nygren (who sold a successful business to fund land acquisition and early development). In contrast, a public company like St. Joe finances projects through its balance sheet and joint ventures. St. Joe’s joint venture strategy reduces its risk – for example, the Latitude Margaritaville Watersound project is a JV with homebuilder Minto and singer Jimmy Buffett’s brand, meaning St. Joe contributed land and some capital while the partner handles a share of development cost. This approach can accelerate development without overstretching St. Joe’s finances, but it also means sharing profits. Another tactic is using Community Development Districts (CDDs) or municipal bonds to fund infrastructure repaid by future homeowners – common in Florida master plans – essentially leveraging future lot sales to finance current town improvements. St. Joe’s large scale allows it to tap such mechanisms across multiple projects. A potential financing hurdle for true town centers is that lenders may be wary of mixed-use projects in unproven locations. This is where St. Joe’s experience and asset base help: they can self-fund initial phases, as they did with building the Watersound Town Center (including a Publix supermarket) to ensure the community has a heartbeat early on. Once a project gains momentum (home sales and foot traffic), external financing becomes easier. From an investor standpoint, one should be aware that town-building can strain short-term profits – heavy investment in amenities might depress margins in the early years. However, it lays the groundwork for premium pricing later. St. Joe appears to be balancing this well: it’s investing aggressively (including hotels, clubs, and infrastructure) while remaining profitable each quarter, thanks to land sales and its legacy timber/land-sale income.
Obstacles and Incentives – Aside from money, other challenges include community acceptance and economic fluctuations. Some residents fear that new “towns” will create traffic or alter community character – e.g., initial skepticism in rural Georgia about Serenbe, or local environmental groups in Costa Rica suing Las Catalinas over water use. Transparent planning and including public benefits (parks, open space, jobs) help win support. St. Joe often sweetens deals by donating land for public schools, conservation, or infrastructure – for instance, it provided land and support for a new Magnet Innovation High School at Watersound, which not only benefits the region but also makes its communities more attractive to families. Such partnerships can also unlock incentives: Serenbe recently secured an $11 million tax abatement to support a $298 million expansion (including a boutique hotel and more homes)– a local development authority’s recognition that the project will generate significant economic growth. Florida has incentives too, like expedited permitting for developments that create jobs or significant tax base. On the flip side, regulatory overreach or shifts can pose risks – changes in short-term rental regulations, for example, could affect the rental yield aspect in vacation communities. A participant on a real estate forum pointed out the uncertainty of “what regulations will come down the pipe” for rentals. St. Joe’s communities on 30A have so far navigated this well (Walton County remains pro-tourism), but it’s a factor to monitor. Also, environmental regulations (wetlands, habitat protection) are particularly pertinent since St. Joe owns a lot of ecologically sensitive land. The company has addressed this by engaging in mitigation banking and selling huge tracts for conservation (indeed, some of St. Joe’s most profitable deals historically were land sales to the state for preservation, indirectly benefiting its remaining developable land by increasing scarcity). The balance between development and conservation is a constant theme – the 30A area succeeded largely because 40% of the land was preserved as state parks/forests, creating a natural amenity that boosts values on the developed parcels. St. Joe seems aware of this dynamic, often highlighting stewardship and setting aside green space in its plans.
In summary, St. Joe’s ability to execute a town-building strategy will depend on skillfully navigating regulatory and financing challenges. The company’s track record in Florida shows it can obtain necessary entitlements (sector plans, PUD approvals) and has the financial stability to invest long-term. The incentives to do so are clear: when town-building is done right, the outcome is highly profitable, beloved communities that generate sustained economic activity. By learning from the case studies of Seaside, Serenbe, Las Catalinas, Chautauqua, Trilith, and others in the NTBA network, St. Joe can refine its approach, blending the art of town planning with the discipline of a public company. If it succeeds, both the residents of its communities and its shareholders stand to gain from the creation of enduring, value-rich places that foster public life, walkability, and community interaction.
Conclusion
St. Joe’s stock represents a unique play on the long-term growth of thoughtfully planned towns in a region experiencing robust demand. Analyzing it through a town-building lens reveals largely positive indicators: high long-term real estate appreciation rates in comparable communities, strong profitability when developments reach maturity, and diverse revenue opportunities from the ecosystem of a built-out town. However, reaping those rewards requires patience, substantial upfront investment, and adept navigation of regulatory landscapes. The success stories of Seaside, Serenbe, Seabrook, Las Catalinas, Chautauqua, Trilith and others demonstrate that prioritizing public space, walkability, and community interaction is not just good urbanism – it’s good business over the long haul. St. Joe’s past and current projects show a company straddling both conventional development and visionary town-building. The extent to which it leans into the latter – doubling down on creating vibrant town centers, embracing mixed-use design, and cultivating a sense of place – will likely determine whether JOE’s shareholders see “Seaside-like” returns in the coming decade. Given the trends in real estate (with buyers increasingly seeking lifestyle-rich communities) and St. Joe’s vast land inventory, the company is well-positioned to capitalize on this town-building momentum. However, there is a risk that a concentration of New Urbanist development in panhandle Florida may saturate the market. There are only so many people who want to move to Florida and are attracted to the particular lifestyle. While challenges in execution remain, the convergence of market demand for walkable communities, supportive local policies, and St. Joe’s strategic focus on placemaking suggests that the town-building approach can indeed translate into substantial, long-term shareholder value – much like the enduring value created in the iconic communities it emulates.
I currently hold a position on JOE and might trade in and out of the stock at any time. This is not a solicitation to buy or sell any stock. Feel free to send me corrections, new ideas for articles, or anything else you think I would like: cameronfen at gmail dot com.