In recent years, the RV and boat storage sector has captured the attention of investors and traditional self-storage operators seeking the next lucrative niche. This burgeoning market mirrors many of the same attractive characteristics that have long driven the success of the self-storage industry: a highly fragmented landscape, low operating costs, high margins, and a strong, growing demand that outpaces supply. The rising interest from investors has led to increased transaction volumes and higher pricing in this niche asset class, while development has struggled to keep pace with the booming demand for vehicle storage.
The Intersection of Self-Storage and RV/Boat Storage
RV and boat storage is often considered a subset of the self-storage market, as many traditional self-storage facilities offer parking for recreational vehicles and boats. However, these properties typically lack the specialized amenities and services that modern RV and boat owners seek. While there has been some recent development aimed at meeting these needs, the supply and demand imbalance presents a significant opportunity for investment and market consolidation. Success in this sector will depend on deep market knowledge and an understanding of the unique characteristics of these properties.
Surge in Demand: A Boon for RV/Boat Storage
Part of the increased interest in RV and boat storage is due to the surge in consumer demand for RVs and boats in recent years. A combination of factors, including a shift towards domestic travel and outdoor recreation, has fueled this trend. Between 2017 and 2021, RV registrations surged by 22%, and despite a dip in sales in 2022, with around 493,000 units sold compared to over 600,000 in 2021, the numbers still far exceeded the historical average of 360,000 annual sales. Boat shipments also hit a peak in August 2023. The increased ownership of these vehicles has driven the need for storage facilities, as many municipalities prohibit RV and boat parking on residential streets or at homes.
Development Challenges and Opportunities
Despite the growing demand, the development of RV and boat storage facilities has lagged behind due to various constraints. These include the significant land requirements for such facilities, high construction costs, and complexities in navigating the entitlement process. According to Yardi Matrix, there were 1,380 dedicated RV/boat storage properties across 42 states in 2023. However, while RV registrations grew by 22% from 2017 to 2021, the number of RV and boat storage facilities only increased by 9.8% during the same period. The annual addition of new facilities has averaged just 2.6% over the past five years, falling short of the 4% annual growth rate seen in traditional self-storage.
This supply and demand dynamic, along with the sector's overlap with self-storage, has heightened interest and investment in RV and boat storage. Transaction volumes have soared, with Yardi Matrix reporting a record 114 RV and boat storage sales in 2022, up from 103 in 2021 and significantly higher than the average of 42 annual sales between 2015 and 2020. The average sales price for these properties has also surged, reaching nearly $1 million per acre in 2022 and 2023, compared to $428,000 per acre from 2015 to 2020. Much of this recent activity has come from large owners and operators looking to build national brands. Nevertheless, 88% of properties remain owned by single-property entities, suggesting ample room for consolidation and economies of scale.
Regional Variances in Supply and Demand
Like traditional self-storage, RV and boat storage markets exhibit regional differences that investors must consider when selecting locations. According to the RV Industry Association, RV ownership varies widely by region, with the Western states having the highest registration rates at 25 RVs per 1,000 residents. The Midwest follows with 23 RVs per 1,000 residents, while the Southeast has 15 RVs per 1,000 people. The Northeast has the fewest RVs, with only 10 per 1,000 residents. At the state level, RV ownership ranges from 4.5 per 1,000 people in New Jersey to a staggering 117.2 per 1,000 in Montana. This data underscores how RV ownership correlates with urbanization patterns and access to recreational amenities, influencing the concentration of storage facilities.
Although regions like the Northeast and urban markets have lower overall RV ownership, they often have strict regulations against parking RVs and boats on residential property, driving demand for storage. States with lower population density and higher RV ownership, on the other hand, typically have more available land for parking, reducing the need for dedicated storage facilities.
Challenges in Measuring Market Saturation
Quantifying the RV and boat storage market can be challenging, as most facilities offer little enclosed parking that is recorded in property data. Yardi Matrix’s database shows that only about half of dedicated RV and boat storage properties include enclosed spaces, with the majority providing uncovered parking. Additionally, many traditional self-storage facilities also offer parking, which can range widely in size. This variability complicates efforts to measure overall market saturation accurately.
Using typical parking ratios and data from Yardi Matrix, it is estimated that the U.S. has approximately 267 million net rentable square feet of parking for RVs and boats, with 75% located at dedicated storage properties and the remaining 25% at traditional self-storage facilities. The top markets for parking square footage include Dallas and Houston, with 19.1 million and 17.7 million square feet, respectively. Smaller markets like Lafayette, Indiana, and Honolulu, Hawaii, have significantly less parking space. The highest parking saturation per capita is found in smaller Texas and Sunbelt metros, as well as Denver, while major urban areas like New York and Philadelphia have the lowest levels, correlating with higher rent prices in these undersupplied markets.
Conclusion
The RV and boat storage sector presents a promising investment opportunity, driven by strong demand, limited supply, and potential for consolidation. Investors and operators who understand the regional nuances and unique requirements of these facilities can capitalize on the sector’s growth. As consumer interest in RVs and boats continues to rise, the need for specialized storage solutions will only become more critical, making this an exciting time to invest in RV and boat storage.
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