From marina to ‘activity center’Posted on Written by Reagan Haynes
In the not-so-distant past, a marina typically consisted of some docks and pilings, maybe a fuel dock, perhaps a ship’s store or some bait and tackle, and not a lot else. That was when the facilities were so full they often had wait lists. It was also before the real estate bust of 2008, after which marinas struggled along with the rest of the industry.
Now marinas are reinvesting in infrastructure to accommodate what a changing public wants — more dry storage, larger slips, amenities, dock-and-dine restaurants and perhaps most important, a focus on high-end hospitality and concierge services.
The buzzword at many marinas is “destination” — not just for boaters, though they remain the bread and butter of the operations. But the idea is also to draw those who enjoy being near the water with places to shop, restaurants, pools, pathways and walkways, rentals and charter opportunities to get non-boat owners enjoying the water.
“Marinas used to be a backdrop, and the industry is much different than it used to be 30 years ago,” says Steve Ryder, project development manager at Bellingham Marine, a company that designs, builds and rehabilitates marinas. “Marinas are now becoming access points for the public to get to the water. The years of just being a storage spot are gone. These are big assets to their communities. It brings people to their towns, and it brings citizens to the water. Whether it’s inland or coastal, these are public-access facilities. The marina we see today in 2016 is something that is designed to be an activity center for everybody to use.”
From larger marina management companies to mom-and-pop locations, marinas are changing, due in part to changing customer demands. They’re building larger and wider slips to accommodate bigger boats, as well as adding dry storage for owners who have shifted from cruisers to larger outboard-powered center consoles. They’re also changing because tax law revisions make marinas attractive to big investors.
“Money is flowing back into the marina industry,” says Wendy Larimer, U.S. legislative coordinator for the Association of Marina Industries. “Some have merged and have become bigger conglomerates, and they are buying up marinas that maybe didn’t make it through the downturn or really struggled through. Marina management companies are snapping up marinas, and that’s becoming a bigger part of the business than it used to be.”
Marinas are also accommodating people who tend to hang out on the boat while at the dock. Some are building patios and bringing around coffee carts in the mornings and margarita carts in the afternoons.
“Destination is really the buzzword,” Larimer says. “That’s what a marina has to be — a destination. A lot of people are just coming down and hanging out on the boat for the weekend, so it’s got to have more than just docks. I think some of that started with the recession, with people who couldn’t afford to take a long trip. So they would just hang out on the boat in a slip, and that was fun, so they continue doing it.”
“People are reinvesting in their marinas; they’re reinvesting in a couple of different fashions,” Ryder says. “Older marinas are being rebuilt to accommodate larger slips. Better options for dry storage are being offered for a lot of the powerboat-type boats that had been in slips in older marinas. With the cost of waterfront property, the marketplace is dictating that marinas and the types of revenue produced are going to be paid by larger boats. That’s also what we see on the manufacturing side with them building bigger boats.”
Many Bellingham clients are renovating older facilities, moving to larger slips, more utilities and more services. The operation side has increased its focus on amenities and creature comforts, Ryder says.
“In the bad years it was kind of keeping paint on it and touching up,” he says. “A lot of properties went into survival mode. They were not increasing new tenants and were trying to keep the ones they had, so they tried to offer more services. Now they’re getting into doing modifications and increasing slip sizes, utilities or upland offerings, with other types of comforts, like an Internet patio, office area used for parties and dry storage.” They’re becoming activity centers.
An upscale mentality
Marinas are also starting to tap into the dwindling amount of time people have for their boats and making things as easy as possible with concierge services. They’ll pull the boat from dry storage, fuel it and set it up with sodas and snacks for the day so an owner can just walk to the dock and go, for example.
Joe Lewis, owner of Mount Dora Boating Center and Marina in Mount Dora, Fla., has been offering concierge services for about two years. Not only will his staff set up the boat and equip it the way an owner wants, he also will haul the boat after the owner is finished, wash it and put it back into dry storage. All for a price, of course.
“I can’t say that those services draw people here; however, once they get here and see that those services are available, I think it helps them make the decision to come here, to pull the trigger,” Lewis says. “I guess it’s not really a draw, but it’s a closer.”
The closer is important today, Larimer says. During the recession, marinas went from having wait lists to dropping to about half capacity in many cases. “For an industry that never had to market, it’s been tough,” he says. “It used to be, wherever they had space, a boater was going to go. That stopped being true in 2008, 2009. That’s why you’re seeing marinas really doing what they can to attract customers with service, and amenities like pools and restaurants.”
Mount Dora has a wait list for the first time in years, Lewis says, but that has only come about in the last six months. At this time last year the marina was at about 80 to 85 percent occupancy.
Westrec Marina Management has been focused on hospitality for 30 years, says president Bill Anderson, and is happy to see the concept taking more widespread hold. “We’ve spent a lot of time training — not just management, but people on the gas dock, in maintenance, security — to be very service-oriented, similar to the Ritz Carlton,” he says. “In our society there’s an expectation of service in the leisure industries that’s been raised by the hotel industry.”
Westrec also has been investing in its existing properties instead of buying new marinas. Although the investment in infrastructure is important, it does not work without service, Anderson says.
“I can’t emphasize enough that all these facilities don’t work if you don’t have a high-quality, well-trained staff to deliver services the customers expect,” he says. “You can invest in the experience, but you also have to invest in employees. Places like Suntex and Brewer, they do a really good job at that, as well. That bodes well for the industry. Nobody does well if someone goes to a marina and service is lousy. The demand for recreational time and dollars has never been stronger, so you have to really deliver that service or people aren’t going to buy the product.”
In general, service expectations at marinas have been pretty low, says Stephen Lehn, vice president of operations for Suntex Investors Group, a management company that has rapidly been buying and investing in marinas during the past year. “To bring in a new generation of boaters, and to recruit new people, you have to make it convenient,” Lehn says. “You have to have a service center, and the best way to operate is for us to oversee and manage that.”
Marinas are starting to think of other little touches common to the hotel industry. “Before it was, if there’s a clean bathroom, you’re good,” Larimer says. “Now it’s a laundry, showers, some have spas. Some will deliver coffee and doughnuts on weekends.”
Ryder recalls an Australian client who had a high number of liveaboards and brought a cart with coffee and croissants by in the morning, and turned it into a margarita cart in the afternoon. Others offer massage services, car rentals and concierge service for lining up restaurants or event tickets — “really taking the hospitality side of the business to a new level,” he says.
Dock and dine
Lynn Oliver, director of marketing for Brewer Yacht Yards, says more boaters are looking for restaurants on the water. “The dock-and-dine component of marinas continues to grow,” Oliver says. “Whether it is for a drink or a meal during a day’s outing, or as part of a weekend cruise, seaside dining is something we promote. Many people, for instance, from Long Island [N.Y.] who cruise to Connecticut — and vice versa — are looking for seaside dining.”
Brewer has 11 locations with on-site dining, and others, such as Mystic, Conn., Mamaroneck, N.Y., and Salem, Mass., have choices just steps from the marina, Oliver says. “Many of our locations also offer courtesy rides to local establishments.”
South Jersey Marina, which was rated the best small marina in 2015 by MarinaLife, was able to start fresh after a fire in 2012 forced renovations before the facility reopened in 2013, says Mark Allen, who heads up marketing for the marina. Now a high-end boutique called Fathoms adjoins the completely reworked Saltwater Cafe, which used to be Dock Mike’s Pancake House.
The higher-scale restaurant is dockside and overlooks the marina, drawing transient boaters as well as locals. “Karin Rickard, a well-known chef in the area, is taking it to the next level,” Allen says. The restaurant serves breakfast and lunch but is beginning to serve dinner on Friday nights. “We have two clienteles, the locals here in Cape May and our transient boating traffic,” Allen says. “A big part of the restaurant is the outdoor dining. It’s a great dining area with umbrellas, and when we reworked the building, we installed French doors that really meld well with the waterfront.”
Restaurants often drive marina traffic, particularly on the Eastern Seaboard, Lehn says. “When you talk about megayachts, those have captains, and often captains will choose destinations which have nice places to eat,” he says. “When they are taking boats from port to port, clients are not always with them. The biggest things are entertainment, food, hotels, other activities, as well as the service part. They have budgets they have to keep, and they want to know the service center will take good care of them and make sure they get in and out at a good price.”
Restaurants are also providing an additional access point for non-boat owners, Anderson says. It’s important “that many of our waterfronts have been reconstructed so the non-boating public can get access right down to the water,” Anderson says. “Particularly, they will often choose to eat at a restaurant down on the water. Maybe they don’t have a boat, but maybe they like watching boats and love the water. There are tons of people who don’t own a boat, but enjoy being on the water.”
In Jacksonville, Fla., several marinas along the St. Johns River and Intracoastal Waterway that were traditionally simple storage facilities — in-water slips and dry or ground storage structures — had nothing to offer people who didn’t own boats. “Now a lot of those places have retail that have been built into them — restaurants, bars — and offer a water experience where somebody on Friday night can go have drinks and sit on deck overlooking the marina,” Ryder says. “I think that’s pretty common with what we see, both on the coast as well as inland.
“IGY, Safe Harbors, Suntex, a lot of those facilities offer lots of different activities for the public. Not just the boating public, but the public,” he continues. “The bottom line of the business is the marina, so they’re offering those services to boaters. But lot of those businesses can offer value to others.”
The Port of Los Angeles is a good example of an overhaul that created more public access. Westrec operates the Cabrillo Way Marina, which is directly adjacent to Ports O’ Call Village, a major waterfront redevelopment that includes restaurants, shops and promenades that bring the visiting public down to the waterfront, Anderson says.
“It’s similar to what they’ve done in Baltimore, where they’re creating that opportunity for the non-boater to get closer to the water and maybe take a harbor cruise or have lunch,” Anderson says. “It provides people an opportunity to spend a day on the water around boats.”
Westrec has managed marinas in Chicago for a long time, providing $150 million in renovations over 20 years, rebuilding all 6,000 slips in the harbor, “installing power pedestals, bike paths, everything,” Anderson says.
There are 6,000 boats at the city’s marinas, but tens of thousands of people go to enjoy the shoreline, the pathways and bike paths. “It was grossing about $5 million when we started,” Anderson says. “Today it grosses about $27 million for the city. It’s the most successful private-public marina partnership in the country.”
The venue served as the first freshwater America’s Cup’s location in the competition’s 165-year history when the Louis Vuitton America’s Cup World Series took place in June at the Navy Pier. “At one point 150,000 people were packed on the pier,” Anderson says. “And the boats would literally go right by. From a spectator standpoint it couldn’t have been more awesome.”
Attracting new people
Drawing non-boat owners gives marinas the opportunity to almost advertise charters and other services, Allen says. South Jersey Marina has three big fishing boats, three touring boats and a party boat he describes as a “floating tiki bar.” A Hinckley goes cruising around Cape May Island, and another scatters cremated ashes at sea — something the marina is marketing.
“We’re doing what we can to get our captains their charters, and that means more marketing, absolutely,” Allen says. “The restaurant, we like to think it’s a draw to get people down here to the marina. Then maybe they’ll come to charter a boat. We try to have the whole package in one location.”
Brewer now has spots for the Freedom Boat Club at five of its locations, including three in Connecticut — Stamford, Deep River and Westbrook. “It gives people who are new to boating a chance to figure out how they want to use a boat and what kind will suit them,” Oliver says. “It also goes the other way. Current boat owners who enjoy boating but need or want the simplicity or greater ease of just stepping aboard are seeking out these clubs.”
Most agree that this shifting dynamic is good for boating, adding that it eliminates some of the exclusivity stigma that boating has struggled with over the years.
Happy crew, happy captain
Operators of coastal marinas say restaurants and amenities are crucial in attracting the megayacht clientele. “When you’re dealing with customers that are looking to market to the megayacht type of market, you’re selling to the captain of the boat, not necessarily to the owner,” Ryder says. “The reason is, the captain of a 150-foot boat’s got a crew of six or 10. If all they’ve got to do is sit on the boat, they’re not happy. And an unhappy crew makes an unhappy captain.”
Consequently, marinas are offering services such as pools, bars and gaming rooms with Xbox systems and Wi-Fi. “You’re looking at an average age of probably 20 to 25 years old. So marinas are giving them an opportunity to get off the boat and really relax,” Ryder says. “Happy crew, happy captain, so that’s why they’ll come back and back. And the location is important because the owner wants to visit nice places.”
Rybovich Marina in West Palm Beach, Fla., was primarily a boatyard where a lot of repair work is done. “But they have a very extensive upland area for the crew to be able to use,” Ryder says. “They have entertainment areas, a pool, restaurant and bar that’s open to the public, owners, as well as crew. One of the major things we see the facilities doing is offering better services for those larger boats with crews working on board. We see that throughout Fort Lauderdale and Palm Beach.”
South Jersey Marina, with its large face dock, can accommodate 160-plus-foot boats, and it sees a lot of traffic heading south from Newport, R.I., in the fall. “We’re a convenient spot to fuel. There are usually no owners on board, just crews deadheading. They want a place to get their hair cut, see a doctor or dentist,” Allen says. “Here anything you need to do you can do with just a walk” or by using the marina’s van service.
“We’ve been marketing ourselves as a high-end transient facility — that’s been the big push,” Allen says. “We’ve always been a popular marina for transient traffic and megayacht traffic because we can handle six or seven 100-foot vessels at a time. And we can handle up to 163 feet. We like the business because they’ll come in to stay, eat and buy 5,000 gallons of fuel or more.”
Not everyone caters to the megayacht market, but most marinas are revitalizing docks to accommodate the shift to larger vessels. “Overall the boating business has gotten bigger — 30 years ago, a 25-foot boat was a good-size pleasure boat for an average owner,” Ryder says. “Now it’s around a 40-foot boat. Those kinds of boats typically stay in the water because they’re not easily trailerable; you can’t store them in the backyard, so the need for marinas and facilities is self-evident.”
The shift in boat size carries over to how people use them, and all that affects the marinas, Anderson says. “Ten years ago, maybe there was a store selling oil. Now you’ll see a huge apparel section, lots of play toys, inflatables for the boat. There is a completely different shift in the ways people are using the boats. In addition, we’ve built wider slips, bigger slips, covered slips, both on the wet side and the dry side.”
A lot of marinas are finally spending money to upgrade and doing more construction projects that involve turning small slips into big slips. “That’s been controversial in some places,” Larimer says. “Some people say you’re squeezing out the little guy, but the reality is, the little guy isn’t there anymore. Some guys just put their 20-foot boat on a trailer and didn’t come back.”
It’s expensive to overhaul slips to accommodate larger boats, so marinas have to charge more to offset those costs, he says. Offering more services makes it easier to sell. “The whole industry has matured, and with that the average-size boat is going up, and services need to stay on par,” Ryder says. “That’s where the dry storage industry has really changed. Likewise, the dry storage industry has gone to more creature comforts for their customers, as well.”
Changing storage needs
This summer, Westrec was wrapping up construction of the largest dry storage facility in South Florida, accommodating boats up to 50 feet. “It really was designed by customers,” Anderson says. “They had no place to store bigger boats indoors in a place that has good access to water.”
The new facility, which was expected to open in July, is two football fields long (plus end zones) and will provide access to parks in the area. “It really is a state-of-the-art facility, and it evolved out of discussions with our customers. It will have two of the largest marine forklifts ever built in the world, built by Wiggins Lift Co. We’re really pushing the envelope.”
Westrec has thousands of boats in dry storage, so that aspect is not new. But demand has spiked for two reasons, Anderson says. “If you go back 10 or 15 years ago, if you wanted to go to the Bahamas or Bimini, pretty much you had to take your room and accommodations with you. They didn’t have hotels that were of good caliber. The boat you had was a cruiser with rooms and beds and kitchens.”
But with the advent of nicer marina facilities and resorts, boats have changed. “Now you get a 35-footer that can shoot across the Gulf Stream quickly,” Anderson says. “You don’t need to bring your room with you. That changes the nature of boating, so now the customer has a choice of leaving the boat in wet or dry storage.”
The second issue circles back to time, or lack of it. “The owner who has the boat in dry storage can call up and say they’re on their way, and we can put in water, ice, sodas, snacks, and have his boat ready for him at the docks,” Anderson says. “People use boats way less than they think they do, and dry storage demand is responding to the fact that people need the option for us to put their boat on the water, let them go out on the water a couple hours, and then bring it in so they can go for a bike ride down the Intracoastal while we wash the boat and put it back into dry storage. The ability to get in and out quickly is very important.”
One challenge that was often discussed a decade ago, before the real estate bust, was the fear that marinas were selling to condo developers, ultimately limiting access to the water. Now companies such as Suntex Investors Group are buying properties to reinvest in them. Anchor South, a group of five marinas, merged with Suntex as a wholly owned subsidiary. The company’s goal is to have a location every 150 miles.
“It’s been a lot of fun. We’ve been growing quickly,” Lehn says. “We’re fortunate to have great investors and a board of directors to support our growth. We acquired and formed a strong partnership with Anchor South, led by Mitch and Alicia Jones. That merger brought five marinas and a good team, including themselves, which was important. Mitch is focused on acquisitions, and Alicia’s focused on communications and procurement.”
The company has people who go out looking for acquisition opportunities in an industry that, similar to boat dealerships, has few succession plans in place. Most are mom-and-pop operations that, like boat dealerships, can find themselves stuck if they’re ready to retire and no family member steps up.
“We feel confident we can provide an opportunity for them to exit,” Lehn says. “We have a plan going forward, and we can look them in the eye and describe that we can carry on their legacy — make improvements, provide a high level of customer service and promote the boating lifestyle. In order to promote the lifestyle, people need to have fun.”
That requires a high level of customer service, he says.
REIT ruling a game changer
The marina industry has been attracting investment dollars, in part because of the real estate bust, Lewis says. But for the most part it’s because of new tax efficiencies in that space.
A 2013 IRS decision held that boat slips within a marina that are leased to boat owners constitute real estate assets for the purpose of real estate investment trust rules. “That was a game changer for lot of institutional investment groups to become players in the marina space,” Lehn says. “That’s a big reason larger investment groups have reached out and thought this must be a good opportunity.”
Several groups Suntex has purchased from lacked the capital to update marinas and reinvest in properties to attract today’s boaters, he says. The $200 million in capital that Suntex has gives the company half a billion dollars of buying power to continue acquisitions.
Others, such as Westrec, are taking a different approach. Westrec made a conscious decision about a decade ago to only invest in existing properties instead of buying additional ones. At Bellingham, Ryder sees marinas investing and updating for the first time in several years, but still not at the prerecession level.
“I think it’s a more conservative approach with what people are doing now, compared to the boom years,” Ryder says. “We’re doing fine, but it’s a steady growth area. We’ve got to be like our marina customers — offer better customer services, new products, timber frame systems to aluminum frame systems, different modifications to concrete systems. We’ve all got to be cognizant of what the customer needs and adapt that to our business model.”
This article originally appeared in the August 2016 issue.