For years now, marinas have been leaving the rental business, parsing their property for sale as individual boat slips or selling it to developers with similar intentions. The individual parcels, known as "dockominiums," were structured to be far more profitable – and far more expensive.
Hit by a declining real estate market, dockominiums may be a bargain. But that may be changing. With the real estate market in decline and property values shrinking, real estate experts say that prices on dockominiums and their rackominium cousins have also dropped, a situation that may present opportunities for would–be buyers.
"Prices of dockominiums and rackominiums across the board have come down dramatically this past year and a half because many were bought by investors," said Brenda Vitucci, a Florida–based real estate saleswoman and member of the Alaqua Professional Group whose background is in marina management and leasing.
For example, she said that a dry–slip rackominium at the Port Marina in Ft. Lauderdale recently sold for about $90,000. In 2005 and 2006, similar units were selling for $179,000 to $300,000.
"Owners are having difficulty re–selling," she said.
THE MARKET
Boating clearly needs waterfront development and investors to fund it. The trouble with the current situation is that anxious planners read the tea leaves wrong – not an uncommon practice for those who look at boating as an investment. Toss in the spice of those alluring stories about real estate investors buying property and flipping it for two– and three–fold gains and the market became frothy.
While there are no good statistics for the number of dockominiums nationwide, a recent survey of marina operators by Applied Technology & Management, a marine consulting firm, indicated that almost 4 in 10 respondents have dockominiums or rackominiums at their facilities.
For several years, the number of slips appeared to be contracting, and the number of new boats to fill them appeared to be expanding. Why not own some bay bottom in Boston? But it is not at all clear that the equation – too few slips and too many boats – was correct, at least not in the proportions that many people bet on.
While there is no doubt that dock space is scarce in many parts of the country, little hard data exists to track the trend nationwide. Furthermore, the Applied Technology & Management study found that the number of people who perceive that there is a shortage of slips was underwhelming in some key states. In Florida, for example, 38 percent of the respondents said there was a shortage compared to 21 percent who said there was not.
On the other hand, there is little disagreement that new boat production had fallen off dramatically. While the really big boats of 80 feet and larger continue to roll out of yards, production of boats up to 40 and 50 feet is down by between 20 and 30 percent, depending on which set of statistics is used.
Vitucci said many new dockominium projects slated for sale have now gone back to being rental marinas. In the survey, 78 percent of marina operators said they have no plans to sell slips or racks in the future, compared to 16 percent who said they plan to sell them. Roughly 6 percent were not sure.
"The pace of dockominium conversion has slowed in recent months for existing marinas as well as new projects for several reasons: A primary one is that prices have ramped up too high for it to be economically feasible for the end users," Vitucci said.
BARGAIN HUNTING
Boat owners unfortunate enough to have purchased dockominiums in the past 18 months or so may be feeling the pain of bad timing as prices nosedived. On the brighter side, this is not such a big deal for those who look at ownership with a long–term perspective – and it could be a buying opportunity for others.
