Before a business can work, any project has to be thoroughly studied to see if it will eventually pencil out. Experts in the RV and boat storage industry say this might be easier said than done with this particular product.
“It’s hard for the market study because there’s really no rental per square foot like in self-storage,” says Rachel Parham, president of construction and development for the Parham Group in San Antonio, Texas. “And it’s really difficult to tell how many square feet should be built in the market.”
Donald Jones, owner of Donald Jones Consulting in Keller, Texas, manages three RV and boat storage facilities. His company also prepares professional feasibility studies for RV and boat storage as well as self-storage developers.
Last year, his company completed feasibility studies in 25 states. Still, he says it’s very difficult to predict the RV and boat storage market. “I haven’t seen anything that tells us how much per square foot per capita to build that I understand or fully believe,” says Jones.
However, RV and boat storage still proves to be a popular product in the storage industry and there are many profitable standalone RV and boat storage facilities as well as RV and boat storage that’s been added to a mixture of self-storage.
“If you have the space to build RV and boat storage, as well as the demographics, it seems it is profitable for many developers, especially if it is part of a mix,” says Jeff Adler, vice president of Yardi Matrix in Denver, Colo., a company that provides data sets to evaluate development.
Thanks to the prevalence of homeowners associations (HOAs), which typically don’t allow homeowners to park their RVs and boats at home, RV and boat storage has become a popular product.
According to HOA-USA, there are approximately 351,000 homeowners associations throughout the United States. Many of them are located in subdivisions where there are larger homes or in condominium or townhouse communities where people tend to have a larger disposable income.
Combine those figures with the fact that both RV and boat sales have been robust in the past few years, especially since the recession ended and more baby boomers continue to retire, and that brings about the perfect storm of product demand for RV and boat storage.
“I do know that the amount of RV and boat storage development is still less than demand,” says Steven Johnson, executive vice president and co-head of self storage practices at Newmark Knight Frank , a company in Pasadena, Calif., that focuses on evaluating appraisals for the lenders.
Although there are RV and boats located in every state, the top three, according to Adler, for RV ownership are Texas, California, and Florida.
Whitney Jurjevich, owner of Ameripark RV & Boat Storage in the Phoenix metro of Arizona, says other states, which have a lot of lakes and destination locations include Arizona, Minnesota, and Michigan.
Finding Land And Access
In the past, most RV and boat storage just included open-air parking. One of the most commonly built now is covered parking. “I see most covered facilities now offering many amenities,” says Johnson. There are also combined self-storage and RV boat storage, which is another popular product that allows the self-storage owner to make use of additional land. Rents can range from under $100 to over $200, depending on the area and site amenities.
A newer type that is less common is the fully enclosed; this type most resembles self-storage. These are typically in very high-end, high-income areas, servicing the most expensive RVs and boats. Rents can range in the hundreds of dollars for each unit, but development costs are significantly higher. Costs for staffing is also higher, as these are typically concierge type facilities.
The less popular type of development is the warehouse type storage, which may be found in old industrial buildings. “The building may be obsolete to the industrial market and can be purchased by storage owners for less than the industrial building market,” says Johnson. “Those typically also have valet service to maximize space and minimize insurance.”
No matter the type of RV and boat storage, professional developers agree that there are differences, as well as similarities, for completing due diligence when it comes to seeking land for RV and boat storage vs. self-storage. “Doing due diligence for RV and boat storage isn’t anything like doing it for self-storage,” says Jeff Helgeson, principle of 180 Self Storage in Gilbert, Ariz., which has one facility that is entirely RV and boat, as well as two that also have self-storage. He says one major difference is that RV and boat storage is typically located outside major cities.
This is typically for two major reasons:
• Cities generally aren’t excited to allow RV and boat storage into their jurisdictions. One main exception may be if the facility is a high-end enclosed facility with concierge service. “It’s much harder to get RV and boat storage into a city than it is for self-storage,” says Jones. “You’re very fortunate if you can.”
• The cost of land for RV and boat has to be lower than self-storage, due to the fact that these sites require much wider drive aisles than standard self-storage.
Helgeson points out that RV and boat storage land is typically closer to major highways that lead to destinations. “They need to be in the direction people go to when they’re heading to the lake, mountains, or on the path to some destination,” says Helgeson. “Also, RV and boat storage, unlike self-storage doesn’t need as much drive by traffic. It helps, but RV customers will search more to find a location.”
As well, when searching for land to build RV and boat storage, you need more of it, according to the experts. “You can’t do multi-story on RV and boat,” says Adler. “You have to plan on having more space.”
Helgeson says you typically want to plan for 40 angled stalls per acre in RV and boat storage. Parham adds that it has become more challenging to make the numbers work, thanks to increased wind and fire standards in many states, saying that covered outdoor RV stalls, which comprise most of the facilities throughout the U.S., are required to be spaced certain feet apart and the metal covering them must bear a certain amount of wind load. “The codes have really changed a lot,” says Parham. “That’s why we don’t just build RV and boat storage only, but we do combined RV and boat and self-storage.”
As well as space for the actual stalls, when planning for RV and boat, you must allow for wider turning access, so RV and boat owners have plenty of room to maneuver their bigger vehicles. “You have to plan for a good turning radius, as well as meet those needs and then create a one-way flow of traffic,” says Parham, who adds you should at least plan on 40-foot-wide drives and the spaces should be angled for easy access in and out.
Due to the fact that many RV and boat storage facilities are located off the beaten path, they may be in an area that doesn’t have running water or electricity or has some sort of drainage issues, all of which you have to consider when planning your facility. Water for RV may be needed for amenities such as bathroom and wash bays or code requirements for fire suppression.
The site also must be evaluated for the potential for a dump station, which experts typically agree is the No. 1 amenity customers request of a facility. Another amenity that ranks high on the list of requests is electricity. Customers want electricity to keep their batteries charged, especially if they will be storing their RV and boats for months at a time.
Other amenities that are a must to include in the development and when considering costs include lighting, security monitoring, and gate access. “The cost of keypads is also higher in this type of development because you have to put keypads in for lower vehicles as well as the higher ones,” says Parham.
Income And Competition
Another major difference in the due diligence process for self-storage vs. RV and boat storage is that the rooftops in your geographic area must have a higher income as well as home-ownership rates.
The geographic area is also different, say the experts. While self-storage is typically measured within a three-mile radius around a facility, the demographics can be measured in a five-mile to 20-mile radius.
According to Johnson, the competition studies must include vacancy and rents on various sizes. “You have to survey your competition, just with any self-storage operation,” says Johnson. “And, you must understand all of the larger trade area.”
Any storage operation will need a feasibility study to determine if the project is worth moving forward. Parham has only completed one study that had RV and boat only. “We completed our first RV and boat only feasibility study at the beginning of the year; the rest of them have included self-storage as well,” says Parham.
RV and boat feasibility studies can present a challenge, but they should contain many of the same sections as a feasibility study for self-storage.
Jones provided an example of a combined self-storage and RV and boat storage feasibility study, since this is the most common way RV and boat storage is built.
The sections include summaries of all of the following:
• Acquisition: How much land is involved and at what cost was it purchased?
• Zoning: This section should include a summary of where the land is located and what the zoning requirements are for the property and what hurdles, if any, must be overcome to build.
• A summary of the town/city/county in which the land is located. This should include its history of population growth and what the area has for businesses/amenities for residents. It should also include street and highway information and topography of the area. All of this information will give an idea for the viability of storage in the area.
• Demographics: A separate demographic analysis, which includes households, income, and other major demographic information can be completed in a three-mile radius for the self-storage portion of the project; for the RV portion of the project, demographics can go out anywhere from five to 20 miles.
• Competition: The experts agree that competition matters in the RV and boat storage market just as much as in self-storage. Competition within the area should be evaluated for the type of RV and boat storage offered as well as the quality of the developments. Jones says, “I like to look for missed opportunities related to product type.”
• Financial model and assumptions, which includes proposed unit mix, including what the facility may collect in rent, based on competition in the area.
• Capital expenditure sheet: This includes a cost breakdown, which includes cost of land, development, and construction.
• At least a five-year overview: RV and boat storage is not unlike self-storage in which there is a projected 24-month lease-up. This section should also include taxes and projected tax costs.
• Design: How will the site be designed? You need to make sure to include angled parking for RV and boat storage. As well, how many spaces will there be per acre and in total and what sizes of stalls will be included? Will the site need a retention pond or some other drainage system? Also include if it will include a rental office and amenities such as dump station, restroom, ice options, potable water, wash bays, and any other amenities that might have value to the customer demographic. This section should also include what type of fencing or wall is needed as well as the gate access particulars.
• Maps: This should include an official zoning map in the jurisdiction in which the property is located, maps of nearby lakes or other destinations (if they are close), as well as maps that shows the demographics.
• Capital expenditure schedule: Includes costs for land, soft costs, awnings, any enclosed buildings, and concrete or gravel. Parham strongly recommends not using gravel. “It is dusty and dirty,” she says. “Many people don’t want that all over their RV and boats.” This section should also include costs for security cameras, gates, software, signs, power, septic and dump station, small office, and other proposed amenities.
Nevertheless, Jones points out there is much more that goes into a feasibility study. Unless you have extensive experience creating these studies for storage, you should hire a consultant skilled in the industry.
A Bird’s Nest On The Ground
That’s what Jurjevich describes as one property his company is currently developing for RV and boat storage. “This is one that another developer tried to do already,” says Jurjevich. “I’ve been doing this for eight years and this one was so obvious, a can’t miss; really a bird’s nest on the ground.”
The demographics were in line with what is needed for this type of storage, including rooftops, disposable income, and good freeways “within striking distance.”
Jurjevich says the land costs were in line with what was needed to make the outdoor covered project pencil as the owner was “very motivated” to sell. There was a lot to be fixed on the project, such as the rock and grading. “They had graded the whole place and part of it was in a flood plain, which had been graded,” says Jurjevich.
He also explained that there are indigenous plant restrictions in Arizona that must be mitigated or moved to another property. “You just can’t destroy them,” says Jurjevich.
Another major issue was that there were permits that hadn’t been filed for or were filed for and never followed up. “The days in Arizona of just doing what you want are gone,” says Jurjevich. “Every jurisdiction wants quality development.”
Water and electricity were already on the property and the sewer was stubbed. “It was a financial investment, but a lot of it was sweat equity working with the city on permitting and other issues,” says Jurjevich.
Once complete, the project will cost under $6 million and it will have 293 covered spaces. The facility will also include lights security cameras, a dump station, and monitored access. “We will have regular business hours, but tenants will have off-hours access as needed,” says Jurjevich.
The Bottom Line
Performing due diligence and completing the feasibility study may be challenging as the experts say “average” numbers for land costs per square foot, unit sizes, and rents are so variable they cannot provide examples. The best advice they give is to make sure you have the experience necessary to build RV and boat or hire a consultant to help you who does as every cost and move is dependent on whether your project will be successful.