Looking back at 2021, marinas continued to be open for business even as restrictions remained in-place for many states, largely due to marinas being designated as critical infrastructure by the Department of Homeland Security. Marina occupancies are at an all-time high across the country, and immediate profit growth has resulted from increasing storage rates. In addition, marina transactions and values are up, revenues are higher, and boat sales continue to record high demand (and unfortunately, backlogged supply)…what was not to like about the marina industry?
Occupancy
Occupancy is driven by three main factors: 1) supply of marinas; 2) demand for those slips/racks; 3) rate prices. As boat sales have continued in explosive fashion over the last two years, more boats are hitting the water yet the supply of wet slips and dry racks remains virtually the same. What has changed is the occupancy of those slips and racks—most marinas now have waiting lists as demand is incredibly high (see Fig. 1 and Fig. 2 below). While this is the general, there are specific marinas and locations that may not be 100% full and factors influencing that performance can be location to core boating population, access to primary boating from the marina, dredging issues, or amenity package offered by the marina, to name a few.
Marinas in suburban and rural markets continue to benefit from net migration out of major metropolitan areas due to the COVID-19 pandemic (a trend we noted in 2020 as well). The boating industry overall has benefited greatly from this wave of new second-home/vacation home and retirement home buyers as most of these locations are on or near lakes or in attractive coastal markets. Proximity to their boat encourages greater use, resulting in higher boater retention for the industry and increased spending at marinas. Another shift in lifestyle benefitting the boating industry is the flexibility companies afford with “work-from-home”.
Rates
Marina Dock Age does a great job canvassing the country for statistics on marina performance around the country, which includes data on rate trends. While the surveys are not a complete reflection of the marina industry, they provide general trends for investors and other marina operators to review, in addition to anecdotes from our team’s experience in working with owners. As Figure 3 shows, virtually every respondent to the survey either increased or maintained rates in 2021. This comes as no surprise given the demand and growth in the boater population. This trend follows similar performance in 2020 and we believe this lends to great pricing power at many marinas for the coming seasons.
Boat Sales
New and used boat sales have trended in parallel to new and used car sales, with 2021 giving manufacturers no rest. Heightened demand for new boats has led to many boat buyers awaiting delivery in 2023/2024! While it is a positive that manufacturers have had this great success, there are several negative impacts resulting from unprepared manufacturers (to no fault of their own), and further exacerbated by supply chain issues. These companies have done a great job adapting to the “new normal” – lack of materials, incomplete product, delivery delays and lack of labor. They’ve implemented customer service procedures that center on communication and transparency, some have been fortunate enough to expand operations and provide greater product outflow compared to when the pandemic first started, and most, if not all, are setting expectations based on factors outside of their control that directly slow their production.
