If you follow the marina industry at all you may have noticed that marinas are changing hands at breakneck speed. Where once investors shied away from a business that has many facets and, to some, can be just plain hard to understand, now they are lining up to get into this seemingly lucrative and booming market.
Full Service Operations With Welcoming Amenities
Why the interest? The answer partly lies in the transition of the marinas from sleepy mom and pop operations that were in the family for generations, to bustling resort-like compounds that cater to even the highest-end boaters. The change is inspired by a new generation of boaters that wants full-service and they want pristine. Marina owners understand this and have spent time and money to upgrade their properties to meet the needs and desires of modern boaters. That means an investor can buy properties that require little renovation and repair.
Buyers are also getting a business with a sudden seemingly endless supply of customers. The pandemic put a bright light on boating as the perfect recreational escape that checked the boxes of maintaining safe social distance, communing with nature, and spending quality time with family. The past two seasons have seen a huge spike in boat sales and while numbers may have slowed from the peak, there is still a healthy stock of boat buyers and a contingent of new to the water boaters who are hooked to the sport.
Another factor that has sparked investor interest is that there is limited waterfront and therefore limited spaces to build marinas. Where marinas are being bought and sold, they are not being built–rebuilt yes, but not newly built. If the marina market is saturated and the interest in boating continues to rise, it’s a safe bet that slips will remain near 100% occupied and the accessory businesses will thrive. Underlying all of this is that a marina sits on prime waterfront property and the appeal of waterfront land is not likely to disappear.
Looking specifically at numbers, cap rates for marinas have remained high over the past decade whereas rates for other investment properties shrunk. The value of a marina is generally measured by its income using the cap rate. We are seeing marinas trading in the 5-8% cap rate range. In part, this reflects that marinas are not just a real estate investment but are also a business. Marina investors are also loving marinas due to the accelerated depreciation they can realize. We have been seeing marina investors entering the market from other asset types such as multifamily, retail, office, and self storage. The cap rates that marinas trade at are more competitive than these asset types.
Long ago, comparisons were made between storage facilities and marinas with marinas being viewed as just storage for boats. Now marinas contain a large range of businesses under one roof. There’s really no end to what types of profit centers can be housed on the property of a marina and the list seems to ever expand. While owners may be better served to lease out space to boat brokers, restaurants, or repair services, adding boat rentals, winter or paddleboat storage, or even a boat club, can boost income potential with minimal infrastructure changes or cost. And with modern advances in technology for marina operations and management, any addition can seamlessly be added into current accounting and operating systems.
Bottom Line
From where we sit, the benefits of marina ownership outweigh the risks, but that is, of course, a personal decision. But if you find you’re ready to jump into the market, ride the tide of the boating boom, and invest in a marina, contact us. We’re happy to be your guide to an industry that has been a daily part of our lives for decades. We have plenty of tools and information at our disposal. Contact us to learn more at team@simplymarias.com | 305-390-0397. Visit us at simplymarinas.com.