A typical TopGolf facility in Dallas, Texas. Topgolf facilities require about 13 acres (5 ha), typically in shopping and entertainment districts near employment centers, as well as specialized buildouts involving netting and poles rising as high as 150 feet (46 m). The latest sites employ more than 400 people, including part-timers.


One of two TopGolf locations based outside of the United States.

Even as baby boomers shift into retirement mode, golf has been losing on average about 500,000 American players per year over the past decade, the National Golf Foundation reports. While golf course development is still strong in Asia, it’s not doing particularly well with younger U.S. players either: according to the Wall Street Journal, the number of people ages 18 to 34 participating in sports such as running rose 29 percent from 2009 to 2013, the proportion playing golf fell roughly 13 percentWith many former anchor tenants closing their stores, developers are also looking for new models to fill out their retail mix.

Texas-based Topgolf International is combining elements of traditional driving ranges and miniature golf with corporate events, food service and other amenities. The number of locations is expected to double in the next year to 20, with two locations in the United Kingdom and other U.S. markets such as Chicago and Washington, D.C.

Bowling is getting a similar makeover: The Northbrook, Illinois–based chain Pinstripes is combining bowling lanes and bocce ball with Italian American cuisine and live music; it is slated to operate seven new locations by next year.

Stakeholders will keep a close eye on the performance of Topgolf locations in frigid metropolitan areas, observes net-lease real estate investment specialist Rick Fernandez, a managing director with Reston, Virginia–based Calkain Companies: “You have to wonder whether people there will be interested in hitting balls after removing their parkas.”

Not only does Topgolf offer modern twists on a pastime that millennials have mostly shunned, but also management’s sophisticated and efficient approach to site selection and project development appears unusually forward-thinking for an operation with a relatively modest footprint. Through multiple-site arrangements with its preferred architect, contractor, site-selection consultant, and deep-pocketed landlord, Topgolf benefits from scale efficiencies and fast-tracked timetables.

In contrast with the pastoral nature of golf courses, Topgolf facilities combines computerized competition—generally engaged in from three stacked levels of more than 100 driving bays—with trendy foods and beverages. Music is piped into the comfortably furnished bays as well as into adjacent bars, lounges, and gathering spaces to create an atmosphere of merriment.

Unlike traditional links where group activities are limited to two or three foursomes, Topgolf targets organized gatherings. A Topgolf facility is a “community amenity,” says chief development officer Randy Starr, where coworkers, schoolmates, or just golfers can spend hours socializing while honing their skills.


With heated bays, TopGolf can remain viable even in colder months.

With charity events playing a prominent role, upward of one-third of Topgolf’s guests are participants in group functions, he says, and the flexible prototype facility—covering 65,000 square feet (6,000 sq m) of indoor space—includes spaces designed and equipped for such activities.

Topgolf is succeeding in spite of the traditional game’s declining popularity because it delivers the rewarding experience busy consumers demand, as well as convenience and value, says Gregory Silvers, chief operating officer with Kansas City, Missouri–based EPR Properties, Topgolf’s primary landlord. “Traditional activities like golf and bowling have lost popularity mainly because of issues like time commitment and costs, but also because many of the operators have failed to realize that they are not simply in the golf or bowling business, but rather they are in the experience business,” he says.

Managers of real estate investment trusts, who perceive no interesting opportunities to develop or invest in traditional golf links, are willing to fund Topgolf’s northward expansion because of the patronage the new locations have attracted. The latest Topgolf locations have near uniformly “opened exceedingly strong and are outperforming the pro forma” revenue projections, EPR president/CEO David Brain noted at the company’s recent quarterly earnings conference call with securities analysts. “It’s been that story [at] almost every location.”

Beyond the entertaining atmosphere of the locations, the company’s patented ball-tracking and scoring technologies are helping minimize potential competition, Silvers adds

Topgolf has been developing its strategy since the early 2000s when British twins Steve and Dave Jolliffe brainstormed alternatives to waiting in line for practice swings at London-area driving ranges. Initial U.S. forays were in the Washington, Chicago, and Dallas metro areas; the bulk of the expansion push has come since the Jolliffes sold their enterprise to the successor ownership group about three years ago for a reported $28 million. Owners include West River Capital, a Kirkland, Washington–based venture capital firm (whose managing partner Erik Anderson is now Topgolf’s executive chairman); Dallas businessman and investor Tom Dundon; and Carlsbad, California–based golf equipment maker Callaway Golf Co.

In its aggressive pursuit of growth since the recapitalization—particularly over the past year—the new investor team has aimed to further highlight the social elements of Topgolf visits. As a result, food and beverage–driven revenues have overtaken golf-generated receipts. “It is becoming everything the owners, myself included, imagined it could be,” Dundon wrote on his blog. Like Dundon, Fernandez expects the social aspects Topgolf to help revive interest in golf among millennials and others.

Though closures of 18-hole courses have exceeded openings for eight straight years, according to the National Golf Foundation, U.S. golf development has not ground to a complete halt, In fact, the first U.S. course designed by Tiger Woods, whose ascendance inspired course expansion in the 1990s and early 2000s—just broke ground at a private club outside Houston.

Regardless of whether links golf regains its popularity anytime soon, Topgolf aims to seek promising sites and occupancy deals in what Starr terms “midmajor and up” markets throughout the country. He also notes that experience suggests that plenty of patrons will want to drive some balls when poor weather prohibits course play.

Indeed, Topgolf’s Wood Dale, Illinois, location outside Chicago does decent business even in subfreezing temperatures. “We don’t do well when it’s 10 below, but when it’s 30 we’re packed,” Starr says. Heating mechanisms keep the driving range’s covered seating areas in the mid- or upper-50s even when the outside temperature is in the 20s, he says.

EPR is comfortable with Topgolf research indicating that the format can succeed in colder metro areas even if the locations are less productive during winter, Silvers says.

As it looks to enter new markets, Topgolf works with the Retail Connection, a Dallas-based multiservice retail real estate consultant, to identify and engage the most appropriate tenant representation professionals. For example, Topgolf works with regional retail specialists such as KLNB Retail in the Washington, D.C., vicinity; the Edwards Co. in the Sacramento, California, area; Western Retail Advisors in metropolitan Phoenix; and Commercial Realty Advisors Northwest in the Portland, Oregon, metropolitan area.

Topgolf facilities require about 13 acres (5 ha), typically in shopping and entertainment districts near employment centers, as well as specialized buildouts involving netting and poles rising as high as 150 feet (46 m). The latest sites employ more than 400 people, including part-timers.

Topgolf does not disclose investment or income figures, but media reports have placed the development cost of a prototype facility at about $15 million—higher than that of an average chain restaurant or drugstore. At Topgolf’s development and operating costs, facilities generally need to generate upward of $200 per square foot ($2,150 per sq m) in annual sales to be profitable, Starr says.

While Fernandez acknowledges that many developers and property owners would view Topgolf’s tenancy as promising, he notes there is also risk because the facilities are large and specialized and generally are located in high-cost districts. Landlord and lender could end up in a bad position if a location fails to attract the anticipated business. “These are very large and specialized facilities,” Fernandez cautions.

Indeed, the cost and customized improvements can make financing a challenge for a developer wooing Topgolf as a tenant—or when the company buys or ground-leases and develops sites internally, which Starr notes is management’s preferred route.

As the company has pursued expansion, operatives have already negotiated more than 15 “reverse build-to-suit” deals through which EPR has agreed to finance construction of facilities that Topgolf will occupy through long-term net-lease arrangements. Topgolf controls the construction process and operates the properties, and EPR receives a return for providing financing and assuming lessor-related risks, Starr says.

Also generating economies of scale, Topgolf engages Aria Group Architects, an Oak Park, Illinois–based entertainment, restaurant, and hospitality specialist, as the architect of record for most of its new developments; ARCO/Murray National Construction Co., a Downers Grove, Illinois–based build-to-suit/design/build specialist, regularly serves as general contractor.

Notwithstanding the firm’s prototype template, the team aims to customize architecture to reflect local culture. For instance, at Topgolf Riverwalk in Scottsdale, Topgolf and Aria Group worked closely with the Phoenix office of HKS Architects to incorporate local color—much of it related to the Salt River Pima Maricopa Indian Community. These elements include native canopy, shading and wall construction patterns, and colors reflecting the landscape and traditional tribal ceremonial attire.

“We think we can make the concept work in every market,” Starr says.

Brad Berton is a freelance writer based in Portland, Oregon, specializing in real estate and development.