The folks at Cushman & Wakefield are bullish about the RV and boat storage business.
So much so that last month Cushman & Wakefield, the national commercial real estate firm, launched a new Recreational Property Advisors unit specializing in providing advisory and brokerage services to those looking to buy or sell RV and boat storage facilities.
In addition, the new unit will handle investment services involving RV resorts and marinas.
The Recreational Property Advisors unit is being led by executive director Devin Beasley, who previously worked for nine years in C&W’s more traditional self-storage advisory group. Kim Brothers, also formerly with C&W’s self-storage unit, helped launch the new Recreational Property Advisors with Beasley.
The new unit currently employs three people, but Beasley said he sees enough growth to potentially grow the unit to ten people.
Beasley recently talked to the SpareFoot Storage Beat about why C&W started a separate RV and boat storage unit, how the RV resorts and marina segments fit into the unit’s business model, and the challenges facing the RV-and-boat storage industry in general.
What prompted Cushman & Wakefield to start the new Recreational Property Advisors unit?
Beasley: About four years ago I started seeing a trend in the recreational storage space for RVs and boats, and it was similar to where self-storage growth was about 25 or 30 years ago. And that growth was something that I wanted to learn more about and take advantage of and jump into it.
There are other portions of your new business unit, in addition to storage, like marinas, RV parks and resorts. How did you get into those fields?
Once we had our arms wrapped around the RV storage space, it was a natural progression to add in the marinas and others because my clients who own RV storage facilities also own or want to get into the marina space, as well as the RV park space. So the conversations naturally progressed into a different product type.
How fast is the core RV-and-boat storage business growing?
It’s been growing ever since COVID, when we had a record number of RVs that were sold. I think in 2021 there were around 600,000 RVs sold that year, compared to the average of around 400,000 per year. So we are still seeing growth in the market. But if you’re developing, there’s only so much you can build because you have to build on larger (lot) sizes, between seven and 20 acres. There’s land out there, but there’s not a lot of land to justify the growth of the space. Still, it’s growing and there’s a lot more institutional equity looking at the space right now to help that growth model.
You mentioned the need to find larger site spaces. So is that one of the biggest challenges for the RV storage sector?
It is. Municipalities are starting to push back on the sheer size of land needed. And getting entitlements and getting zoning for this type of build out, it’s not the highest and best use of land for a lot of jurisdictions. So the hoops that you have to jump through to get a project approved, if you’re talking about development, is becoming more arduous.
How is RV-and-boat storage similar to self-storage and how are they dissimilar?
For both, you’re satisfying a need for the end user. People need to store their things in traditional self-storage. They’re storing their equipment, their items, their memories. It’s the same thing with RV storage. They need a place to store it during the off season. They have bought these multimillion-dollar vehicles, in some cases, and they want protection. So that’s the need. The difference is, I would say, the length of stay and occupancy. Occupancy is usually a little bit higher in the recreational vehicle world as well as the rates you can charge.
Is there a lot of overlap between a recreational storage and traditional storage, with some sites having both when buying or selling properties?
There’s a little bit of overlap when a traditional self-storage facility also has ancillary RV and boat parking there. But for the most part, there isn’t a lot of that. There’s not a lot of traditional self-storage owners who own RV-and-boat storage and vice versa. So there is a pretty heavy line between the two when you’re looking at the investment portion of it.
How does the consolidation we’ve seen in the traditional storage industry compare to that of the RV-boat storage industry? Is that segment moving towards concentrated ownership as well?
I would say somewhat. But it’s not nearly the same as traditional self-storage. You know, Extra Space and Public Space and others have consolidated a lot of the traditional self-storage market. But the largest owner in the RV-and-boat storage world owns now only [around] 70 properties, I believe, and that’s the largest owner in the space. So if you compare the two, is not comparable at all. In no particular order, some of the bigger owners are RecNation, Blue Gate, Macritchie, and Carefree RV.
How has the RV-and-boat storage industry, as well as some of your newer areas of business, doing with higher interest rates? Has it cut into the number of deals?
Every product type is hampered. The transactional velocity is hampered. And I believe the reason is the owners understand the value of the property. For RVs and boat storage, we’re still seeing positive rental rate increases in the space. But the value of the property is not in line with that. So the owners are hesitant about selling because they know that the value they can get a year or two from now is potentially higher than what they’re selling for now.
It’s about the cost of capital. The cost of capital has been high. But it’s been coming down. We had a few decreases in the interest rates. That’s helping out. There’s still a way to go to get there, but we are seeing more transactions happen. As the cost of capital comes down, I think in 2025 we’re going to see transactions increase. It all depends on the Fed and where interest rates move.
Jay Fitzgerald
Jay Fitzgerald has more than 20 years of experience covering business and economics for publications and online sites, with a growing emphasis on blogs, social media and podcasts.