Condo threat to marinas ebbs

Posted on Written by Reagan Haynes

26_marinasReal estate bust has scared off developers, but money for boating improvements is still hard to come by

From floating concrete docks to fluctuating power requirements, the marina segment of the industry is constantly evolving. And as everywhere else, the sluggish economy has dictated many of the current norms.

In a development contrary to most recession-driven changes, marinas also have shed an alarming trend that had raised concerns about access to the water. Gone are the days when the owners of a marina could sell it at a premium to developers who would convert the property into condos or something more profitable, says Jim Frye, president of the Association of Marina Industries and vice president at Westrec Marinas.

“In general, it’s safe to say that marina managers, though not hit as hard as other segments, continue to suffer,” Frye says. “Rates and occupancies are still down. Occupancies are beginning to come back, but the rates are being held.”

That’s true, in part, because the crash of the housing market affected the overall value of marinas, Frye says. “The boom in housing and the conversion of marinas to non-marina entities was not a good thing for the industry,” he says. “It was good for the individual [selling], but for the overall industry it wasn’t a very good trend.”

Marinas were able to charge more because access was disappearing, Frye says, “but it certainly didn’t take much of a downturn for that to go away. Rates were discounted pretty steadily.”

Some developments that had included marina operations have actually stalled, Frye says. “Some of those are for sale, but it’s hard to value them because they’re not large enough to stand on their own, short of supporting a housing development,” he adds. “That trend has certainly gone quiet. I don’t think it will be so forever. I think folks still want to live on the waterfront. When and if we return to better times, those developments will be restarted.”

The high end

Bob Berry, project development manager at Marinetek North America, says the high-end buyers never left boating.

“Most of the high-end boats have continued to sell,” he says. “They’re down a little bit, but it’s not as big of a dip as middle-class boating. It was certainly upbeat at the [Fort Lauderdale] boat show. I know all kinds of boats were sold — small, medium and large.”

“[The high-end] segment wasn’t as heavily impacted as others,” Frye says. “Those super-wealthy buyers have still got wealth and are still building those yachts, and we’re still doing all we can to accommodate them. We’ve got a facility, Sunrise Harbor in Fort Lauderdale, [that] only has 20 slips but accommodates boats up to 300 feet.”

50_marinasThe slowdown has been in the cruiser market — particularly in boats between 50 and 70 feet, Frye says. A few years ago there were defections from the “great big battlewagon” sportfishing boats in favor of boats such as the Intrepid with three outboards, Frye says. “They’re still going fishing, but they don’t have the expense with the fuel, the crew and the dock space,” he says. “They weren’t the easiest things to use, so they’re choosing smaller, more nimble boats.”

Despite that shift, Westrec, which has 25 locations in North America, is building bigger slips to accommodate the growing length of some vessels, Frye says. “I think we’ll continue to see that trend unless something radical happens. You can always put smaller boats into bigger slips, and I think the trend toward building bigger will continue. The smaller boats are getting increasingly stored on land — when I say ‘smaller boats,’ we’re storing boats up to 50 feet in dry racks in Fort Lauderdale. We’ve got a building full of those Intrepids. I guess I call those ‘smaller boats,’ but they’re not small by any means.”

With growing emphasis on the high-end boater, Frye says marinas are starting to offer more services, but he adds that they always have focused on customer service. “That’s essentially what the marina operator does; he provides the experience,” Frye says. “We’re going to see more marina concierge.”

At Westrec, services that used to come at a premium are now offered to everyone, Frye says. “You can call and have us launch your boat; we’ll fill it full of fuel, put food on it, beer, sunglasses, whatever you want. You come back and turn the key, and we’ll clean it up and put it away.

“We realized when we’d stock the boat we were selling all this retail stuff, selling gas, selling stuff at the dock store,” Frye says. “We saw a big uptick in our sales. We don’t have that extra charge anymore.”

There seems to be less of a focus on high-end versus entry-level in the marina segment than in boatbuilding. “In part, that is the expense of renewing marinas,” Frye says. “The nature of marina development in recent years suggests there are a lot in the middle right now. Some will be renewed; some will drop down to the value scale. There is a significant expense in renewing your offering, or physical plant.”

Frye says people are willing to pay more for first-class facilities and amenities, but marinas have always had a difficult time attracting capital to invest in those things because the finance industry doesn’t understand the marina industry very well.

“Of course, with this downturn it’s even more difficult right now. It’s hard to borrow that money, and if they are borrowing it’s on a local basis. There’s no national marina lender at the present, so that makes it challenging.”

Marina operators have to be sure they can attract additional revenue if they do make the investment. “It’s hard to expand your revenue without increasing your footprint,” Frye says. However, “you can reconfigure your water space so you can fit more large boats in, so you’re able to add value that way.”

Floating concrete docks

Those who are making the investment or finding the capital for upgrades are increasingly moving to floating concrete docks, which is what Berry says his company sells. They are newer to the U.S. market, but prevalent in Europe.

“Timber’s been the old standard since forever,” Berry says. “It’s cheap, but it doesn’t last; you have to keep replacing it, and it costs money to replace it. It’s not only the money. You have to go through the permitting process, and that is extremely painful. It takes years.”

Marinetek’s solution not only lasts twice as long as timber docks, but in the end it’s also much cheaper because it requires less maintenance. “More and more, the higher-end marinas want a more quality product. They don’t want splinters,” Berry says. “Concrete docks make a difference for the consumer. They’re heavy, even though they’re full of foam, and that’s what people love about them. They’re extremely stable. On timber, if you jump the whole dock moves. This is like walking on the street.”

It’s also more forgiving on the heels. People sometimes will “walk out of their shoes” when they get them stuck between the planks on wooden docks, Berry says.

Concrete docks also fare better in storms, says Mark Allen of South Jersey Marina and the Strictly Boaters Boat Show in Cape May, N.J. He would know. “We had a tremendous pileup of sand [after Superstorm Sandy], but we’ll be the first to tell you how fortunate we were,” Allen says.

He attributes the good fortune to floating concrete docks that Bellingham Marine Industries of Bellingham, Wash., installed and the high pilings at the Cape May marina.

“We put in new pilings that were substantially taller than what we had had,” Allen says. “We had a lot of flooding right here at the marina. There was a foot of water downstairs at the ship store. It came over the bulkheads by a foot or more, but what happened in the marina itself — we have floating docks and the boats were tied to the floating docks. The boats were all still tied up, but the dock itself had ridden up these pilings, and it looks bizarre. There was no way to get to the docks because the water was above the ramps, so it was  really good forethought by the folks who own the marina to put in extra-high pilings and floating docks.”

It’s not just the docks that get destroyed in storms when they are fixed instead of floating, Berry says. “When you get extreme high tides and storm surges that are plus six feet, and the dock is plus three, your fuel pumps, pedestals, everything is underwater getting destroyed,” Berry says. “The floating docks on piles, the docks just float up under the water instead of going underwater, so that’s a huge factor.”

They also help ramp access during drought conditions, such as those that much of the Midwest and South faced last summer.

Floating breakwaters

Permitting walls for oceanside marinas not in a basin is increasingly difficult because it means disturbing the entire ecology of an area, Berry says. As a result, floating breakwaters have become increasingly popular.

“In order to make a sheltered harbor in the past you would have to build a breakwater,” Berry says. “In older days the standard was a rock jetty. You were piling rocks up the water or it could be a concrete structure with piles into the ground. Fixed wave-break structures are very expensive and increasingly difficult to permit because you’re blocking the migration of fish, changing the sediment flow. You’re really changing the whole natural habitat.”

The floating breakwater is cheaper and a lot easier to permit because it doesn’t interrupt the ecosystem, Berry says. Waves can still get under the structure and into the basin during ocean swells, but for wind chop and wakes, they’re very effective.

Electricity

After two incidents that resulted in the electrocution deaths of four children last summer, electricity has been an issue. AMI has been working with the American Boat and Yacht Council to help operators get training in effectively increasing capacity.

“It’s a lot more than just running another cord,” Frye says. “If it’s something you’re trying to do correctly, those retrofits don’t come cheap.”

Berry says that at long last the trend is beginning to reverse as new technology favors the energy-efficient. “A lot of these are old wiring systems, and they’re sometimes neglected and not properly maintained,” Berry says. “You can kill someone. It’s not something to mess around with.”

It used to be that 30 amps was the standard, but some megayachts now can run as much as 1,000 amps of power. “The copper wire and transformers and everything else needed can cost as much as the marina,” Berry says. “But I have to say the trend for energy-efficient lighting, in particular LED lighting, is becoming more and more the norm or a common option.”

Solar-powered systems also are becoming more popular. “The trend is starting to reduce the amount of power,” Berry says.

This article originally appeared in the December 2012 issue.

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