State of the Marina Market: FY 2020 & 1H 2021
Since March 2020 and well into the first half of 2021, COVID-19 affected the industry in ways no one could have predicted. While other industries were severely impacted, the pandemic quickly proved to play a strong role in the growth and success of marinas around the country (as well as other facets of the marine industry). As one of the “last bastions of happiness”, boating provided social distancing, a new lifestyle and leisure pastime, and now represents the new family vacation for many. While boat dealers have had their best years ever, effectively backlogging manufacturers until 2023 or longer, marinas have realized exceptional growth – all of which we will cover throughout this report.
The global health crisis of 2020 and into the first half of 2021 has left an indelible mark on society, structurally changing how people live, work, play, vacation, dine and shop. Many of our clients have questioned when things will return to normal, or if the definition of normal has been changed forever. We believe there have been systemic changes to our society that while realized now, likely would have been realized in the coming decade; COVID just expedited these changes. The dramatic lifestyle changes of the last year will directly affect the demand characteristics of marinas, over both the short- and long-term, and we intend to keep you apprised of these market changes as they occur.
Marina occupancy will continue to be up over the 2019 and 2020 levels through the second half of 2021. Since Covid has added some much-needed revenue and EBITDA to marinas that previously did not have funds, owners can begin addressing cap-ex, creating a better marina experience for boaters and a more attractive property on sale. Furthermore, struggling marinas that would have sold in early 2020 will continue to have a lifeline and will be less encouraged to sell in the second half of 2021. As Covid forced employees to work from home, it demonstrated to employers that employees do not need to be in a downtown high-rise to work – consequently, many corporations will continue to allow all or partial work from home. This systemic change will lead to more people being able to boat more often after work, before work and maybe even during the day for an “emergency” boat trip.
There will continue to be a flight of boat owners to the suburbs as they are seen to be safer than big cities. With applications like Zoom, Teams, Cisco and other video conferencing services, 2020 and into the first half of 2021 demonstrated to employers that employees can practically live anywhere and still be productive. That has driven white-hot home prices (particularly in the south and suburbs of major cities) where marinas are more easily accessible to boat owners. This in turn will continue to drive interest in boating, marinas, marina resorts, second home and vacation areas. With financially healthy marinas, increasing occupancy and slip/rack rates, more buyer interest will follow, not just from the usual suspects, but from “new to the industry” investors. With less marina assets coming to market (the number of distressed marinas has gone down) and heightened demand/competition from new and existing marina investors, we believe marina values will continue to increase as opportunities grow scarce. We may even see, for the first time since the great recession, some cap rate compression in the second half of 2021.