Look to Campground Real Estate for High Yields
Specializes in providing actionable insights into the commercial real estate space for investors, brokers, lessors, and lessees. He covers quarterly market data reports, investment strategies, how-to guides, and top-down perspectives on market movements.
This article was updated on 7/12/2023.
Commercial real estate developers are always seeking unicorns, those magical, undeveloped acres they can turn into high-yielding properties. Campground real estate, most of the time, tends to fall in that category.
Traditionally speaking, these properties, like multifamily real estate, office buildings, storage facilities, hotels, and even campgrounds, tend to get the greatest number of renters. The good news is that, if you've ever dreamed of developing commercial land into a campground, there has never been a more perfect time.
Consider this: Americans are hitting the road again in record numbers, and campgrounds and RV parks have become one of the most lucrative and highest-yielding commercial real estate classes, with returns ranging anywhere between 10% and 30%.
Compare that with the fact that most commercial real estate investments will yield 6% to 10% return on investment (ROI), and you have an opportunity on your hands.
The Pandemic Was a Game-Changer for Campground Real Estate
More than 25 million RVers take to highways and byways in a typical year, but the COVID-19 pandemic's widespread lockdowns affected most industries, hitting hospitality, travel, and tourism particularly hard.
Instead of canceling vacations altogether, Americans turned their attention to camping to escape the stress of everyday life and escape to the ourdoors
In 2020, there were more than 86.1 million camper households in the U.S, and more than 48.2 million households camped at least once. There were just over 10 million first-time camper households, including both tent campers and RV—motorhomes, travel trailers, and campers.
There was such high demand for campground real estate that some campgrounds across the United States and the UK reported a 500% increase in reservations up to a year in advance from 2020.
Sales for camping gear have increased since 2019: The monthly demand for all camping gear, such as camping chairs, lanterns, backpacks, and sleeping bags, increased by 25% in the spring of 2021 and by 86% compared to the spring of 2019. Sales for camping tents alone are up 97% compared to 2020, supporting the studies that say most first-time campers whet their appetite with tent camping.
According to Pattern, an e-commerce intelligence company that analyzes marketing trends, camping gear sales surged at the beginning of summer 2020, soaring from $13 million in monthly sales to more than $19.5 million in monthly sales for all camping and outdoor equipment.
Campers Turn to Recreational Vehicles
Interest in recreational vehicles is also at an all-time high. An RV owner demographic study found that RV ownership has tripled in size since 2009, and now boasts a record 13 million RV-owning households, split almost equally between those over and under the age of 55, thanks to the 18-to-34-year-olds who now comprise nearly a quarter of the market.
The year 2020 also saw its greatest increase of 1.7 million RV-owning households, which includes the sales of more than 430,000 new recreational vehicles.
Based on shipment projections alone, the industry is expecting new RV sales to grow to more than 500,000 in 2021 and surpass record highs set in 2017.
Campground Real Estate Requires More Than Just a Place to Park
Today's savvy campers are looking for more than just a place to park for the night: They're looking for a place to play and work.
According to the Kampgrounds of America 2021 North American Camping Report, one of the most dramatic changes from 2020 was the habits of the campers themselves, who are now more likely to take midweek trips compared to camping only on the weekends.
Not surprisingly, campers will be taking these midweek trips more often. This change is linked to the ongoing work-from-home trend, which workers are leveraging to transform into what's known "corporate nomads" This is true of students, too. One-third of campers indicated they worked while camping in 2020, and more than 40% indicated they planned to do so in 2021.
What's more is that campers stayed, on average, six additional nights if they had access to WiFi and cellular service.
These numbers are likely to continue to rise. A recent study projected that, by 2028, more than 90 million Americans will work as freelancers, which means more freedom to work from the road.
RV Manufacturers Are Responding
We should note that some have already opted for this lifestyle permanently: There are approximately one million full-time RVers in the US. In keeping with the trend, innovative RV manufacturers have adapted by offering floorplans that include dedicated office areas with space for a laptop and other office necessities.
These office spaces also include multiple USB ports and onboard high-wattage power inverters to keep those digital devices charged up.
Thanks to Increased Activity, Campground Real Estate Can Be a Smart Investment
As more campers hit the road, rising demand for campground real estate will lead to increased reservations and, in turn, increased profits. RV parks and campgrounds are part of a special commercial real estate asset class that requires little or no additional capital after the initial upfront investment, which can include the cost of the land and infrastructure development.
Costs will vary greatly according to the type of land you intend to develop, whether it's for a campground with primitive sites and no hookups, cabins, glamping sites, or an RV park with all the bells and whistles. If you're looking for the highest ROI, give campers what they want: beautiful campground real estate with good infrastructure and modern amenities, such as WiFi, showers and restrooms, sports complexes, swimming pools, fitness centers, playgrounds, and dog parks.
To further increase potential profits, look for commercial land with great views and trees that are located close to traditional camping activities like hiking, rock climbing, and water sports. The State of Utah might be a great place to start.
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