News
Ben Baroody Authors Article for Myrtle Beach Quarterly
Wednesday, June 30, 2010The following article, written by Attorney Ben Baroody, was published in the June 2010 issue of the Myrtle Beach Quarterly and may be viewed at their site at the link below:
History of Myrtle Beach Development: Where will history guide us in the future
By Benjamin A. Baroody
Since World War II, Myrtle Beach has been transformed from a sleepy, coastal Carolina getaway town into a national tourist destination and real estate hub. Has it been worth the transformation?
An Early History
Like other coastal regions, the roots of Horry County are founded in the families to whom King George III made large land grants prior to the 13 colonies declaring their independence in 1776. Most of Myrtle Beach was owned at that time by the Withers family, known for plantation farming. By the late 1800s, the Burroughs & Collins Company of Conway had purchased most of the property in what is now Myrtle Beach and used the land primarily for turpentine and timber. But F.G. Burroughs had a vision to turn the coastal area into a vacation destination. At the time, the only access to the area was on the old Kings Highway (now U.S. 17 Business), which ran from Boston to Charleston (and unpaved until 1940).
In 1900, the Burroughs & Collins Company began operating a 14-mile railway from the “old town” of Conway to the “new town” on the coast. The line connected to the larger Atlantic Coast Line in Conway, allowing easy travels for both lumberjacks and vacationers to the “new town.” That same year, at the suggestion of Mrs. F.G. Burroughs, “new town” was renamed Myrtle Beach after the abundant Wax Myrtle shrubs that still line the avenues.
Development followed. The Sea Side Inn opened in 1901 between what is now 8th and 9th Avenues North, and the original Pavilion (then a large wooden structure, dance hall and bath house) opened in 1908.
In 1912, Burroughs’ two brothers and Simeon Chapin formed the Myrtle Beach Farms Company that owned just under 65,000 acres for farming, timber, and land development, which flourished. The families later created the Chapin Company in 1928 to manage all mercantile and retail operations, from building supplies to clothing. These two companies ultimately merged into the present-day Burroughs & Chapin Company.
A Strange Turn of Events
By the “Roaring ’20s,” industrialists across the country were earning fortunes never before seen because of the lack of an income tax, labor laws and SEC or other Wall Street regulators. Enter John T. Woodside, president of the Woodside Cotton Mills Company in Greenville, S.C. By 1926, Woodside and his brothers had acquired six cotton mills, one of which was nearly the largest in the nation. Woodside had also developed the 17-story Woodside Building, then South Carolina’s tallest building, and the Poinsett Hotel in downtown Greenville. With times seemingly so good, Woodside turned his focus to Horry County.
Also in 1926, the Myrtle Beach Farms Company conveyed to Woodside nearly all of its land holdings in Horry County between the Waccamaw River and the Atlantic Ocean (retaining the Pavilion property), which was 64,488 acres for $10 an acre. By contrast, the city of Myrtle Beach today consists of 10,752 acres (16.8 square miles). Myrtle Beach Farms wisely decided to provide purchase financing for the massive acquisition and, in turn, retained a mortgage on the property. Woodside immediately commenced development, including construction of the grand Ocean Forest Hotel, Pine Lakes Country Club and the surrounding residential neighborhoods (Woodside Drive still circles Pine Lakes today). The 300-room hotel rivaled the Homestead, Greenbriar, Grove Park and other gilded-age hotels.
On Black Tuesday, Oct. 29, 1929, however, the stock market crashed and with it, so did the Woodside fortune. Woodside soon defaulted on his obligations to Myrtle Beach Farms and other creditors, and Myrtle Beach Farms foreclosed. At an auction in 1933, the property was deeded to the highest bidder, Myrtle Beach Farms Company, for $270,000, perhaps the state’s largest foreclosure, in terms of acreage.
The Golden Age
The original Pavilion was destroyed by a fire in 1944, was rebuilt in 1948 after World War II, and remained in continuous operation until 2006. The Pavilion was the major public attraction of the area, with bathhouses, dance floors and amusements. That, combined with our gorgeous beaches, attracted vacationers. Cottages dominated the stretch from the Ocean Forest Hotel southward, and inns and boarding houses occupied the area closer to the Pavilion. Howell “Skeets” Bellamy Jr. grew up in Myrtle Beach during this time, working at the Pavilion while his father was president of the Chapin Company. “We hunted ducks in Briarcliff Acres and the Chapin Lakes every winter,” says Bellamy, now 73, who continues to practice law at the firm he founded in 1962.
Myrtle Beach Farms continued to control the development of the area, while the Chapin Company controlled the mercantile and retail operations, including operating warehousing, building supplies, and furniture, clothing and hardware shops. The companies maintained a conservative development philosophy, which contributed to a stable local economy.
According to Bellamy, post WWII Myrtle Beach was a sleepy vacation destination for South and North Carolinians to spend the summer in their family’s cottage or to spend a week in one of the inns or boarding houses, like the Chesterfield Inn, built in 1946. “Myrtle Beach Farms Company owned all the real estate and was therefore able to control the supply and ensure the local real estate market remained stable.”
As the political climate changed and Myrtle Beach became more popular, development increased: 20-room inns became 50-room hotels; multi-unit housing came into vogue, and condominiums soon followed. Bellamy later drafted the first master deed for a condominium regime in the area. Of course, the more property the Myrtle Beach Farms Company sold, the more responsibility it passed on to others to maintain a stable local economy and real estate market.
One of the first area real estate market downturns occurred in the mid 1970s. Between Nov. 1976 and Dec. 1980, the prime interest rate rose from 6.25 percent to 21.5 percent. Later, the 1986 Tax Reform Act eliminated many of the tax benefits of owning second homes and investment properties. Edwin Hinds, then a young real estate lawyer at the Bellamy Law Firm, recalls staying at the office until late in the evening on Dec. 31, 1986 to close as many loans for clients as he could before the law went into effect the next day. Subsequently, the stock market dropped 22.6 percent on Oct. 17, 1987. According to Hinds, “the spigot was turned off. Condominium development ceased.”
Despite these tough times, Myrtle Beach flourished. “The projects were much smaller in terms of dollars and size,” adds Hinds.
Jill Griffith, another real estate lawyer with the Bellamy Law Firm, recalls, “I remember the high rates and I remember the act. However, we assisted clients in developing River Hills Golf and Country Club in Little River and Pawleys Plantation in Pawleys Island in the late 1980s. Both projects contained over 300 lots and both sold out relatively quickly.”
Additional slumps followed, from recession and tax increases in 1991 to Sept. 11, 2001. Yet, the Myrtle Beach real estate and tourism markets always bounced back, usually better than before. However, Bellamy, Hinds and Griffith all agree that none of these downturns came close to the current downturn.
The Golden Bubble
In the 1990s, Myrtle Beach had become a national tourist destination with national branding and major attractions, among them Broadway at the Beach, The Palace Theatre, Carolina Opry, Dixie Stampede, Medieval Times, outlet malls and more. These projects were the factories and mills of the area, bringing employment to thousands. Simultaneously, Coastal Carolina University was growing rapidly and development expanded beyond the Intracoastal Waterway onto tracts not owned by Myrtle Beach Farms in a new area called Carolina Forest. Road improvements were also made, including Highways 22, 31, the Grissom Parkway and International Drive. Myrtle Beach was recognized in various commercial and marketing statistics as one of the fastest growing areas in the country. The population grew and development again increased.
With that national recognition, came national interest. With the economy and stock market growing at a record pace following 9/11, investors from all over the country, flush with easy money borrowed from banks and mortgage brokers, took advantage of the newly discovered real estate market, and prices were driven to unimaginable levels through speculation. With demand seemingly endless, developers sought to quench their appetites by building even bigger and better residential and commercial projects than before.
Unfortunately, by 2008, stock markets tumbled, trillions in personal assets were wiped out, banks stopped making unsustainable loans, and demand came to an abrupt halt. Real estate values plummeted. Many longed for the stability created by the Myrtle Beach Farms Company in the 1940s and 50s. And many questioned, was it worth the ride?
A Look Ahead
While the national economy is certainly to blame for the local economic problems we have experienced since the boom, we cannot forget that it was the national economy that created the investment that poured into Myrtle Beach during good times and transformed the area into a major employer and economic powerhouse. National economic booms are as much responsible for the Ocean Forest Hotel as they are for the Market Common, and many of the major projects in between.
We now find ourselves where Myrtle Beach Farms found itself approximately 70 years ago. Recognizing the toughest of times, it used its power to conserve the market and maintain stability. A golden era followed.
The reigns controlling future development have been turned over from two companies to us all. If we can all learn from the previous booms and busts, we can use the grand gifts given to us by the developers of our community- from world-class golf courses and luxurious resorts, to new, high-end attractions such as The Market Common- to enter into a second golden era based upon conservative growth and long-term stability.
It is not the critic who counts; not the man who points out how the strong man stumbles, or whether the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena … who strives valiantly; who errs, … because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who … spends himself in a worthy cause; who at … best knows … the triumph of high achievement, and who at … worst … at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.
President Theodore Roosevelt, Paris, 1910.
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