For years, RVs have been associated with retirees who spend their golden years traveling the country. But that’s changing and real estate investors have noticed. Encouraged by these changes and seeking higher returns than those offered by traditional property types, these investors are putting more of their money toward RV parks and campgrounds.
“We have seen investor demand for outdoor hospitality properties explode as other sectors have continued to erode,” says Yogi H. Singh, partner of National Land Lease Capital (NLLC), a private investment firm that owns close to a dozen campgrounds, RV parks, and marinas across the nation. “The national shortage of professionally developed, resort-quality assets along with the high barriers to entry, provide insulation to the sector that we find attractive.”
New generation of RVers
Since the start of the pandemic, a growing number of Americans have vacationed in RVs or gone camping. After being cooped up for months, people craved wide open spaces and the opportunity to see new places. Today, RVing and camping remains a popular alternative to other types of travel.
While the traditional RVing retiree segment has expanded due to the aging of the baby boomers, its younger generations that are currently driving most of the growth in the outdoor hospitality sector. Valuing experiences over possessions, millions of millennials and Gen Z are choosing to spend their money on travel.
“Underlying consumer demand drivers for outdoor hospitality are strong,” says Carl Kruelle, chief investment officer of Blue Water Development Corp., an Ocean City, Maryland-based firm that develops, acquires, and operates resort-level outdoor properties including RV parks and campgrounds. “There’s heightened interest amongst consumers to get outdoors and experience nature. That’s been a consistent trend over the last several years.”
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Moreover, younger people are also taking advantage of remote work opportunities that have emerged throughout the pandemic. For many people, this newfound freedom means visiting new places. An increasing number of Americans are adopting a transient lifestyle that RVing offers and taking their work on the road.
“Because younger generations don’t have to be in an office every day from nine to five, being in one location and dumping their money into a home is not necessarily the American dream anymore,” notes Tristan Farrell, president of Sunlight Resorts, a Georgia-based RV resort developer with 30 years of real estate development experience in the housing market. “I think the American dream now is traveling.”
Few similarities between old and new properties
Older RV parks were mostly just a place to park and campgrounds were just a place to set up a tent. Beyond communal bathrooms and showers, these properties rarely offered any additional amenities.
Today’s new and updated RV resorts and campgrounds couldn’t be more different. They often offer a level of comfort and convenience that was unheard of in the early days of RVing. Some even offer a range of luxury amenities including swimming pools and fitness centers as well as daily activities such as yoga classes, kayaking, and golf.
For example, Sunlight Resorts has implemented fresh design concepts for its two new luxury RV parks in Florida. The firm’s Champions Run Ocala Luxury RV Resort features 482 oversized RV sites combined with park model cottages for short-term and long-term stays, high-end landscaping, and a 12,000-sq.ft.-clubhouse with a state-of-the-art fitness center and a ballroom with a performing stage.
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Other luxury amenities include a resort-style swimming pool with two hot tubs and a rock waterfall as well as tournament style recreational courts for pickle ball, bocce ball, and shuffleboard. There’s also a signature Tiki Bar.
Both Champions Run Ocala and Resort at Canopy Oaks have received the 10/10/10 rating from Good Sam, a leading RV industry organization. The three-number rating is earned based on the property’s superior amenities, cleanliness, and environment. Less than 1 percent of all RV properties in the U.S. receive this recognition.
Sunlight Resorts plans to develop several more luxury RV parks across Florida and the Southeast. Currently, the firm has two parcels of land in Florida under contract and expects to develop at least two new properties annually.
Ultimately, Sunlight Resorts’ goal is to sell its RV properties once they’ve reached stabilization as the firm has no desire to become an owner/operator, Farrell said.
“RV parks and campgrounds are cash cows and they almost run themselves,” he added. “That’s what makes them so attractive to investors.”
Recent entrants into outdoor hospitality ownership such as Sunlight Resorts are joining a handful of investors that have been active in the space for quite a while. For example, the two largest outdoor hospitality investors—Equity Lifestyle Properties Inc. (ELS) and Sun Communities—have been investing in RV parks for decades.
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Similarly, Blue Water has been active in the outdoor hospitality industry since 2002. The firm prefers to invest in properties located on water—hence the name Blue Water. Additionally, it gravitates toward assets close to population centers which provide a strong demand base.
Most of Blue Water’s properties range from 200 to 700 sites each which provides scale and allows for significant investment in resort amenities to further drive demand, according to Kruelle. It looks for assets that are either under-managed or have significant expansion opportunities.
During the second half of 2022, Blue Water made two significant acquisitions: Endless Caverns, an RV property located in Virginia’s Shenandoah Valley and Badlands/White River KOA Holiday, an RV resort and campground adjacent to Badlands National Park.
At the time of purchase, Endless Caverns offered 148 pull-through and back-in RV sites, nature trails for hiking and biking, a zero-entry pool, and a catch-and-release fishing pond as well as kayaking, rafting, and tubing on Shenandoah River. The firm has expanded the property by more than 300 sites.
Meanwhile, Badlands/White River KOA Holiday presented an opportunity for Blue Water to add a “unique destination getaway” to its portfolio. The area is a popular dark skies location for stargazers and photographers and visitors can view the Northern Lights from the site in late fall and early spring. The property’s 146 sites offer a mix of RV sites and unique glamping options including a yurt with a skylight for prime star viewing, teepee, and camping cabins.
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However, rising fuel prices and inflation are beginning to take a toll on the industry. As fuel costs increase, the price of RV travel goes up as well. This makes it more difficult for people to afford to take trips and many are cutting back on their travel plans as a result. In addition, inflation is driving up the cost of RV parts and accessories, making it more expensive to own and operate an RV.
However, the fundamental fact remains that camping is the cheapest way to recreate domestically.
Worth Pondering…
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—Peter Drucker