At Simply Marinas, we’re reflecting on 2024 marina sales and looking forward to helping negotiate more successful marina transactions in 2025. We’re sharing where we are today and where we believe marina sales will be in 2025. While it is early to predict what will happen in a new year with any certainty, we have seen a healthy momentum in buyer motivation and activity, so far at the onset of the 2025. We believe there is a healthy momentum that will accelerate marina sales beyond 2024.
Where We Are Today
Last year we saw the marina market stabilize a bit from the steady stream of sales we saw in previous years buoyed by the pandemic-induced boating boom. The heyday of dealers unable to keep boats in stock, manufacturers struggling to keep up with demand, and marinas 100%occupied across all regions has somewhat subsided.
The selling and buying of marinas has also slowed, but marinas are in the unique position of having little competition for what had been a fast-increasing number of boats needing storage. There are just about 10,500 marinas in the United States, a number that’s not expected to grow by much. Unlike other commercial operations, the space for marinas is limited and often highly protected. Finding new waterfronts to build is increasingly difficult if not impossible. Those wanting to get into the marina business generally have to buy an existing property.
That limited supply positively impacts marina valuations. A study by IBIS World indicated from 2022 to 2023 sales prices increased more than 15% and those prices have held steady or further expanded. Also, accounting in part for the rise in sales prices, is that marina revenue is rising. In 2024, revenue increased by 0.5% to $6 billion.
But, while the price for marinas has been rising, the number of marinas sold has been slowly declining. Let’s take a look at why this has happened. The slowdown has been impacted by:
Rising interest rates – To try to ward off a recession, the Federal Reserve raised interest rates. For marina buyers looking to get a loan for their purchase, the higher interest rates made that option more challenging and more expensive, leaving some buyers to step out of the market and wait for better rates.
Inflation – Last year we also felt the impact of inflation which raised the cost of seemingly everything. Marinas found deferred maintenance projects more challenging to pay for while boating customers had less money to put into recreational pursuits. Those with boats were not boating as often, and the boat buying market shrank.
Recreational Time – The boating industry also saw impacts from the return of work and school commitments that were diminished during the pandemic. Weekend soccer matches, high school football, and time spent in the office, reduced free time that may have been spent on the water. That left marinas with fewer customers for their other services like rentals, RV parks, and boat clubs.
Insurance – With a seemingly endless array of natural disasters hitting each year, the insurance industry is beginning to balk at covering at-risk properties. Rates are either skyrocketing or coverage is being limited. With their location at the water’s edge, marinas are a risky business as severe storms and flooding become more commonplace. If you’re in the market to buy a marina, make sure you look carefully at the coverage options before you sign on the dotted line. Rising insurance premiums or costly repairs can significantly cut into profitability and make marinas a less appealing investment.
The Economy
Just a few months back we anticipated the Federal Reserve to steadily cut interest rates and mortgage rates to decrease, although not back to the days of 3%. We also counted on inflation easing giving people more disposable income.
Sometimes elections can change everything and the results from this past election have left even the most exalted experts scratching their heads. Economic volatility is expected to remain but it’s anyone’s guess as to how wild a ride we may face.
The Federal Reserve cut interest rates again in December, but commercial property lending rates rose clinging to between 7% and 9.5% as of this writing. Property lending rates tend to move based on the 10-year Treasury note yield instead of the short-term interest rate. With investors now predicting inflation ahead, the yield, and therefore, the mortgage rate is rising.
A few months back it was hoped the Federal Reserve would continue to cut the interest rates throughout 2025, but with the Trump administration’s plans for tariffs and the mass deportation of immigrants, the Fed is expected to cut rates more slowly to compensate for an increase in consumer prices. We’re not expecting to see any dramatic changes in commercial property
lending rates in the coming year.
The state of the economy will also factor into boater behavior. If everyday prices remain high along with lending rates, there’s little incentive for people to buy boats. However, holding onto an existing boat and spending vacations closer to home on the water may be more appealing and boat owners will continue to need places to store their vessels. An outlier will be fuel costs. For now, the oil and gas market seems stable, but any uptick in fuel costs will impact how boaters use their boats and decrease the profit for marinas that sell fuel potentially making a sale less attractive.
If you’re considering buying or selling a marina in 2025, plan to closely watch industry trends and economic indicators.
Better yet, contact Simply Marinas. You can rely on us to stay on top of the marina market and provide you with a clear understanding of where the market stands at any given time and what factors are occurring that could impact a successful transaction. Request a copy of our Seller’s Guide to get started.