Boats Are Getting Bigger, And CRE Investors Are Rushing To Build Places To Park Them

As boats get bigger, more expensive and more powerful, owners are grappling with where to park them — a problem commercial real estate investors are racing to solve.

“We just bought a marina property in Palm Beach Gardens. It’s a beautiful area, but it was built in 1983. We’re going to scrape it to the ground and build one of the best marinas on the East Coast,” new Port 32 CEO Austin Schell told Benzinga. 

“Some people drive a used Toyota like me, and some drive a Bentley. It’s the same with boats. Mercury just released a 400 HP V10 engine. With the average size of the boats in South Florida, there are just too few slips that can handle the bigger ones.” 

Port 32 owns, operates and develops dry- and wet-slip coastal marina assets and has nine in its inventory. 

While companies like Port 32 are marina-centric and racing to invest in new properties, others are transitioning from their traditional assets. 

Michigan-based Sun Communities Inc. SUI, a real estate investment trust known predominantly for its ownership of manufactured housing and RV parks, has taken a big leap into the marina business. As part of its 2022 annual report, Sun Chairman and CEO Gary A. Shiffman praised the company’s performance saying healthy rental rate increases in its manufactured housing, RV and marina properties support his positive outlook for 2023. Sun owns 101 marina properties globally. 

Armada ETF Advisors Portfolio Manager Al Otero told Benzinga that Sun has been buying marinas using the same thought process they employ in purchasing manufactured housing. 

“What they’re doing is buying the marinas and putting in condo projects alongside. It’s tough to define marinas these days and the phenomenon it’s become,” Otero said, noting that the types of marinas investors are looking to house much bigger boats and wealthier customers. 

“These boat owners are not weekend warriors,” Otero said. “The new marinas are more up-market and the margins have been terrific with a lot of potential for growth.” 

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But not all marina investment targets are adjacent to the deep blue sea. TopSide Marinas, a family-owned company that acquires and operates high-quality marinas nationwide, recently closed on the 4.9-acre April Plaza Marina on Lake Conroe north of Houston. It’s the company’s fifth marina acquisition since its launch in 2021. TopSide’s portfolio also includes a marina on the Gulf Coast in Galveston. 

The global leisure boat market is expected to grow at a compound annual growth rate of 4.7% between 2022 and 2030, when it’s expected to reach nearly $65 billion. 

While this looks like a burgeoning new trend for REITs looking to diversify from multifamily or office acquisitions, Port 32’s Schell says marina investment is still just a tiny slice of the commercial real estate pie. 

“Historically, marinas are a fragmented, small asset class, and less than 1%” of CRE holdings, with only an estimated 12,000 marinas nationally,” he said. 

As for its investment future, Schell warned there will be a defined limit on how many marinas could be purchased. 

“Demand may be up, but the supply is pretty static, at least on a big-picture basis,” he said. “There’s finite waterfront and limited suitability for marinas.”

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Photo provided by Port 32 and Smith Aerial