LIPG Comments in Marina Dock Age Article “Sales Continue Through COVID-19” | June 2020
Companies working in the marina market space are seeing an impact from COVID-19, like most every business across the county. It’s not all negative though.
However, even some marinas that were able to stay open are feeling a pinch due to the limitations placed on restaurant and hospitality facilities. “We expect limited service at restaurants and reduced occupancies at hotels/motels to continue through 2020 and possibly into 2021, all dependent on the longevity of the crisis, stay-at-home orders, and re-opening orders by state/county of course,” said Brett Murphy, investment advisor/senior marina analyst with Marcus & Millichap’s Leisure Investment Properties Group.
“Likewise, marinas in areas that prosper from heavy tourism will feel the effects of reduced travel, reduced/cancelled charters and other interactive marina experiences that attract visiting guests.”
Marinas also will continue to feel the impact on their day-to-day operations in terms of social distancing practices, direct interaction with customers, cleaning standards and sanitation guidelines.
Early indications for the 2020 marina market were optimistic, and although the coronavirus pandemic has made an impact in some ways, brokers are still seeing market activity.
Following the COVID-19 shutdowns, Marcus & Millichap advised its clients not to put any marinas on the market until at least May or June. One reason was because buyers were not in the position to tour marinas due to stay-at-home orders in many locations. Secondly, they wanted to see if there would be an impact on slip and rack renewals for the season.
“The good news is that it seems slip and rack renewals are going quite well in most markets,” said Jeff Spilman, Marcus & Millichap investment advisor. “We are pleased with how we see things going.”
Spilman said a couple of transactions were put on hold due to the health crisis. In one instance the buyer was on lockdown in New Jersey and could not hire people to do the due diligence. However, the buyer said when the state re-opens he is willing to go back under contract.
With the ups and downs on the stock market and the overall economy being in a state of flux, it’s unclear at this point how the pandemic might impact financing for marina purchases.
Spilman said there is some concern that lenders are too stretched in manpower right now taking applications for the Payroll Protection Program, SBA loans and grants aimed at helping businesses weather the pandemic’s impact on the nation’s economy.
“Many of the lenders have their staffs working from home which has very much slowed the new loan process. We believe that should normalize soon,” Spilman said.
Spilman said buyers may have more concerns than usual about the overall economy moving forward or if there is a risk of an extended recession because of COVID-19. “Because most marinas are experiencing particularly good activity this spring, it may prove to enhance the viability of marinas as a good investment. Boat owners have proven to be financially resilient during this health crisis. In some areas of the country, like Florida or warmer states, marinas have been busier than ever,” Spilman said.
Murphy predicted marinas will continue operating their core profit centers (dockage/storage, fuel, service) at a very high level through the remainder of 2020 and into 2021. The profit centers currently limited due to COVID-19 restrictions may return to average levels as the economy moves to a “new normal.” Overall, he expects marina transactions to be at a reduced pace relative to 2018-2019.