The Next Big Niche Sector To Watch? RVs and Boats

The RV and boat storage market is poised to be the next big thing among self-storage niche sectors, as record demand for such vehicles stokes demand for facilities to store them.

“The RV/boat storage sector has all the makings of an emerging niche asset class: elevated demand fueled by demographic and social trends, strong potential for income growth, and a dearth of institutional capital that creates an opportunity to exploit for deep-pocketed investors,” write Jeff Adler and Paul Fiorilla of Yardi Matrix in a new report. Yardi predicts RV/boat storage deliveries to hit a two-decade high watermark in 2022, but the analysts note “the imbalance between demand and supply should keep occupancy rates elevated and push street rates ever higher.”

RV registrations hit a historic high of 571,000 in 2021, andmotorboat sales peaked at 325,000 in 2020 and fell slightly to 313,000 last year, according to Statistical Surveys. States with the most RVs registered since 2017 include Texas (256,323), California (219,896), Florida (150,196), Michigan (103,025) and Washington (100,601). States with the highest number of registered motorboats since that time are Florida (215,490), Texas (126,490), Michigan (87.585), Minnesota (71,004) and Wisconsin (67,935).

Thus far, growth in the sub-sector has been limited by a lack of awareness and data among investors, limited institutional money and weak supply centered around the amount of land required to build such storage facilities, Adler and Flotilla say. Construction costs and entitlement process difficulties have also been stumbling blocks.

“New supply is likely to remain insufficient to meet demand, given constraints to development,” Adler and Fiorilla say. “One constraint is the limited number of developers in the segment. Another is locating suitable facilities. Each storage unit requires about 750 square feet of space, so a minimum of three acres of land is necessary to build a facility large enough to generate sufficient revenue. Some RV/boat storage sites encompass more than 15 acres.”

But institutional investors are beginning to take note of the sector: a record 66 properties were sold in 2021 totaling $284.5 million, nearly three times the previous high of $100.7 million across 35 transactions in 2020. So far this year, 37 RV/boat facilities have been sold for a total of $196.2 million, and the average price per acre of facilities sold in 2022 is $624,500, well above 2021’s record level of $447,000 and more than double the prices from just a few years ago, Yardi Matrix data shows.

“The RV/boat storage segment represents an opportunity for investors, since more than 90% of the property owners in the Yardi Matrix database own only one unit and just a handful own more than five,” the Yardi Matrix report notes, adding that the largest owners in the Matrix database are Gary J. Wojtaszek, who along with private-equity firm Centerbridge Partners operates under the brand RecNation RV & Boat Storage, and A-Affordable Storage.

“Opportunity in the RV/boat sector falls into different levels,” Adler and Florilla say. “One level is the need for more facilities, presenting an opportunity for investors to acquire land and build properties. Another option for those with capital is to create a portfolio by acquiring properties owned by mom-and-pop investors, much as institutional owners are doing in the traditional self-storage segment. However, unlike traditional storage, where overdevelopment is a perpetual concern, there is little chance that RV/boat storage will get overly saturated anytime soon.”

They say owners also have the opportunity to raise rents; RV/boat storage rates are on average are almost half as much per square foot as traditional self storage.