Two months ago, I spent a little time in Orlando, Florida, at the Toy Storage Nation seminar, taking a deep dive into the characteristics of boat and RV storage. The event was sponsored by Janus International (storage door and tech provider), several developers, and marketing firms.
We toured a large facility and spent time with experts focused solely on providing state-of-the-art boat and RV storage to customers. Here are my takeaways from the seminar combined with developing 30,000 square feet of boat and RV parking at our Mint Hill location. Please note that I’m focused on RV storage in this article, but much of the same information applies to boat storage as well.
You may have heard that RV sales skyrocketed during the pandemic. It’s true. Consider these statistics, courtesy of the RV Industry Association:
- The RV industry delivered over 600,000 RVs in 2021, breaking the previous record in 2017 by 19% (see chart in figure 1)
- About one in ten households own an RV
- 9.5 million people have considered or are considering an RV purchase in 2022
- One in five leisure travelers is considering an RV purchase in the next five years
- Two in five leisure travelers are planning an RV trip in 2022
RV ownership has grown about 62% since 2001 and has no plans to slow down.
Those are interesting statistics, but how does that translate to parking demand?
Oftentimes, HOAs restrict parking in neighborhoods to passenger vehicles or require the recreational vehicle to be stored in the garage. Most recreational vehicles won’t fit in the garage. Here’s an example from my HOA:
RVs are expensive with prices ranging from $10,000 for pop-up campers to over $500,000 for a top-of-the-line luxury RV. Anyone who purchases an RV but lives in a parking restricted neighborhood must include the annual cost of storing/parking the vehicle with the cost of maintenance and taxes. In other words, if someone is looking to buy an RV, they’re looking for parking at the same time.
If RV owners can’t keep their eye on their prized possession because they can’t park at home, then they want the next best thing: clean, safe, secure, welcoming parking storage.
Security cameras are a must at parking facilities. Camera technology has advanced to include night vision, human detection, heat detection, and a host of other security features for owners. They’re easy to professionally install and they deter theft and vandalism.
Here’s an industry secret about security cameras: the cameras aren’t primarily for the customer, they’re for the facility owner.
Cameras not only deter crime but they can also be used to defend claims of damage by RV owners. Inexperienced RV drivers can bump into another vehicle or the upright canopy pillars that are between parking spaces, causing damage to the structure. When confronted, the drivers usually blame it on something or someone else. The cameras will help find out who caused the damage, and whose insurance is going to cover that damage. More on insurance later.
Fencing that reaches 10-14 feet is ideal. The taller, the better. Tall fencing deters thieves from scaling walls to damage or vandalize vehicles. High fencing provides the “fortress feeling,” protecting the goods on the inside from unwanted visitors from the outside.
The sun’s ultraviolet rays cause damage to anything left outside for long periods of time. RVs are no exception. RV owners prefer to keep their vehicles out of the sun to extend the life of their vehicles. Covered spaces allow storage owners to charge more for those spots and serve as a differentiating factor from the competition.
RV owners need dump stations to get rid of wastewater. Not much to add here, it’s a must-have amenity.
Surprisingly, this is one of the favorites of RV owners. Unless an RV has a built-in freezer, it’s going to be a pain to plug in and maintain a portable ice machine on a moving vehicle. Providing access to fresh ice delights a lot of RV owners who need their iced lattes before they hit the road. It’s the little things that matter.
Acquisitions and Development Characteristics
The following are what we look for when acquiring existing RV parking facilities or intend to build from the ground up…
Markets with High Demand
Typically, boat and RV parking occupancy in growing markets is very high, oftentimes with a waitlist for specific size spaces. We recently closed on Eagle Self Storage, which had a 20-person waitlist for RV parking. We’ve seen strong demand for boat and RV parking in cities like Denver, Colorado; Charlotte, North Carolina; and Greenville, South Carolina. I’m sure it’s the same where you live.
Opportunities for Improvements
It’s common to see gravel parking at most locations. Gravel is much cheaper than paving, and RV owners will accept gravel because parking space is already limited in their area.
But it’s not what customers want. They prefer paved parking where they aren’t walking in mud when it rains or snows. Paving a site can lead to parking premiums in most cases.
Of course, if a facility is lacking security cameras, dump stations, ice machines, etc., those items can be added where appropriate. In some cases, it can be difficult to add canopies but not impossible. It comes down to the cost and lost revenue (RVs have to move) to see if it’s worth the hassle.
What to Consider if Building from the Ground-up
Just like any real estate, the market is important. Because boats and RVs are expensive, we tend to look for household incomes around $100,000. These are the people that can afford the cost to buy, maintain, and park those vehicles.
We also look at a larger trade area than the typical three to five-mile radius for self-storage. Boat and RV owners will come from a ten to 20-mile radius, or further, to park their vehicles. Locations near lakes or with easy access to highways are ideal. In a perfect world, the best site would be somewhere between residential areas and a destination like a lake, a campground, or a national park.
As for land size, seven to ten acres is minimal (smaller in some cases), but greater than ten acres is ideal, the larger the better. We can fit more parking spaces and have wide drive aisles (about 60 feet) to allow for maneuverability is preferred. Land over ten acres will allow ample room for enough parking spaces, setbacks, and water retention to help the cost of land and construction make sense.
We’d prefer to be in a highly visible location off a main road, but oftentimes, municipalities aren’t keen to have a giant parking lot off a main road.
I toured a location that was behind an industrial park with zero visibility from the main road, but that wasn’t a problem as the facility leased over ten percent of spaces in the first 30 days of opening! Demand was strong in that market.
Differences Between RV Storage and Self-Storage
Besides storing different goods, boat and RV storage has a lower expense ratio due to lower insurance costs and lower repairs and maintenance costs.
An average expense ratio is low to mid-20%. Compared to storage where expense ratios can be in the high 20s to mid-30s, this is a dramatic difference. Insurance costs are relatively minimal because any damage to the facility caused by moving vehicles is covered by the vehicle owner’s insurance policy, not the property policy. This is where cameras come in handy to prove who caused the damage and who pays.
Boat and RV storage customers fit a different income profile compared to self-storage customers. Self-storage customers can be anyone with any level of income who needs a unit. Boat and RV customers tend to be high earners who value their vehicle and tend not to cause headaches or pay late for their space. It’s not uncommon for RV parking customers to never miss a rent payment and never be late.
On the flip side, it’s important to collect registration information from each customer to deter a thief from parking a stolen vehicle at a facility. It’s also important to add the facility to the insurance policy as an additional insured. Boat and RV owners will say they have a certain level of coverage, but then reduce that coverage, or cancel it until they need to drive again. This opens the facility owner up to problems if the driver of the RV hits a building and doesn’t have insurance to pay for the damages.
We’ve covered the demand drivers for boat and RV storage, the characteristics customers look for when renting parking, and what we look for when buying or developing these sites. There is an art and science to the acquisitions and development process, and we’re always looking for great sites that meet most or all these characteristics. I’m looking forward to presenting you with boat and RV parking investment opportunities in growing markets in business-friendly states.