The Future of RV and Boat Storage with Jim Blanda

THE SELF STORAGE REPORT — EPISODE TRANSCRIPT Episode: The Future of RV and Boat Storage with Jim Blanda Guest: Jim Blanda — Managing Partner, Industrial Storage Brokers (Florida) Host: Chris Berg — Abernathey Development Published: February 6, 2025 (live) Video: https://www.youtube.com/watch?v=LQ6hfw8Vtak Key topics: RecNation's $500M raise with Goldman Sachs, RV & boat storage as an emerging asset class, HOA-driven demand in Florida and the Sun Belt, insurance cost advantage vs. self-storage, cap rates (6–8% in place, 8–10% stabilized), rent growth stagnation vs. 2020–21 highs, RV sales rebound, first-time homebuyer age shifting to 38 and mobility trends, solar panel plays as a state-by-state tax game, zoning realities (light industrial + special use permits), technology-driven 20% expense ratios vs. self-storage 30–40%, Class A development as the next chapter, RecNation's "lifestyle experience" model, why highly fragmented ownership creates roll-up opportunity. Note: Speaker attribution reconstructed from YouTube captions. Light cleanup of transcription errors only; wording preserved. ————————————————————————————— Chris Berg: Welcome to the Self-Storage Report. Interesting article came out yesterday in regards to RecNation — they're going to go out and raise capital, they're focused on RV and boat storage. Raised $500 million, partnering up with Goldman Sachs. Very excited to have our guest today, Jim Blanda. He was actually going to be on a few months ago, and then I saw this article yesterday and I was like, "Hey Jim, we've got to have you on to talk about what's happening with this $500 million raise." What's exciting about having you on, Jim, is when you and I spoke a while back, you said, "Chris, I am really honed in on this RV and boat storage asset class because I really believe there's asymmetrical returns." Jim is managing partner at Industrial Storage Brokers out in Florida. He's been spending some time in the space, and it's great to have you with us, Jim. Thank you. Jim Blanda: Thanks for having me, Chris. Thanks for having me. Chris Berg: So we'll touch on the article in a moment, but first let's just talk about your transition into this space and why you said, "Hey, I need to focus very intently on RV and boat storage." Jim Blanda: Absolutely. So I'll bring you way back to, I think it was about 2020–2021, and I was working on some self-storage assets at the time. I came across an RV and boat storage property on the east coast of Florida, and me and my team, we looked at the deal. This was when self-storage was the hottest asset class in the market — everyone was dumping money, you had all these funds raising capital to put money into self-storage. So it was a perfect opportunity to convert this property, which already had zoning for storage, to a three-story climate-controlled self-storage facility. We listed the property for sale to market it for a conversion to self-storage. Throughout that process, all of the investors that offered on it for self-storage were off the asking price. At the same time, we had multiple investors offering full asking price, and I would ask those owners, "Why are you offering full asking price here? What's going on?" And I found out all of them were RV and boat storage owners — they wanted to keep the property the way it was. I'm from Philadelphia, which isn't a big HOA market. Moving down to Florida in 2021, it was eye-opening to me — the amount of HOA communities they have down here, especially in the Carolinas, the Sun Belt, all of that, with all the development they've done since really like 2010. When I listed that property, we had full-price offers and everyone wanted to keep it RV and boat storage. So I asked, "Why are you keeping it RV and boat storage?" They hit me with: the HOAs, the interest rates, RV sales were super high, and the need to park them, and the lack of availability. So we ended up getting that transaction done at the asking price to an RV and boat storage investor, and it kind of just spiraled out from there. I did some research on my own, started pulling information about these HOAs, the different drivers into the space, and the lack of real data in the market. You had opportunities like that property — for example, they were charging, I forget the exact numbers, I think it was something like $75 per space per month, month-to-month tenants, and the neighbor down the road was charging $150. So you can double the rents. And your client base is wealthy individuals who own RVs and boats — a $75 change in price, especially when there's no availability to go anywhere else, is not going to get them to drive to the facility, pick up their boat or RV, and take it somewhere else. Additionally, at the same time, self-storage was getting hit with all these increases in insurance costs and also the cost of capital. Self-storage properties are more expensive with the building and construction. With RV and boat storage, you're saving on insurance because each individual owner of the RV or boat has their own insurance policy — so you're insuring less building, and the insurance cost is lower. So while the cost of capital and the cost of insurance were rising, you needed to match the revenue. With RV and boat storage — the below-market rents on a lot of these sites, plus the fact that compared to the rest of the market, insurance was affecting this space less, interest rates were affecting this space less, and the insurance costs weren't going up as much — there was a lot of funds that had been created to take advantage of this space. You have a highly fragmented market where you can raise revenue and expenses are pretty much staying consistent. So when I started looking into that, it was obvious — there's a value proposition here to pitch investors on. We started going out and learning who's out there, who's buying these. RecNation obviously being the big dog in the park, buying up a lot of these. And then you have a lot of other funds that I realized were raising tens, 20, or hundreds of millions of dollars to come in and buy RV and boat storage. I'm a numbers guy. It's very simple: when you have demand of that number and not a lot of supply on the market, there's an obvious disconnect there, and our team wanted to take advantage of that. Chris Berg: Boy, I did not think we were going to go here this fast, but I want to do a little bit deeper dive into the insurance aspect of things. Recently we had a great commercial insurance woman on the show, and she talked about — "Hey, I've got a gentleman in the Midwest right now that's actually framed part of his investment thesis around investing in the Midwest because of this insurance debacle" — you know, as well as anybody, in Florida, California, things like that. So talk to us a little bit more about what the lack of insurance cost is providing in the NOI for the owner and/or investor. Jim Blanda: Yeah. So we were actually working at the same time we did that deal in Fort Pierce — what really hit me was we were also working on a deal in Ponchatoula, Louisiana. We do deals nationally, and a lot of our deals are in the Sun Belt. So Ponchatoula, Louisiana is right on the water, very similar market to any market in Florida — also had big insurance issues. We were underwriting that property and put it under contract. I believe the insurance was $13,000 a year. When we went to go get new insurance to close the deal, it went to $55,000 — obviously putting the NOI down by like $40 grand. So it killed the deal. They asked for a price drop, which, understandably, the NOI went down, they asked for a fair price drop, but the seller just wasn't able to accommodate that price drop, so the deal died. At the same time, that deal in Fort Pierce I was talking about — the RV and boat storage property — they had one office building with a couple carports where they were doing some covered parking. The insurance on that property was only $4,000. NOI was — I'm kind of guessing around here — if it was, call it, like $100K to $150K, $4,000 of $150K NOI is such a small percentage of the actual gross income. And when we sold the property, I think the insurance didn't go above $5K — it stayed in that $4,000 range. So while I was dealing with an issue on a self-storage property where insurance more than quadrupled — which I think was an extreme circumstance — on the reverse side, I was dealing with this in the RV and boat storage space. And it all comes back to: you're only insuring the office and then some carports that are there, and then each individual tenant is going to have their vehicle insurance on the vehicle. So when you sign the lease, you're going to put in there that they're liable, and it saves you a ton on insurance. Chris Berg: Let's jump into a little bit about dynamic pricing. I think one of the things you see right now — there's so much data on pricing within self-storage that a lot of times you hear people say, "Hey, you know what the REITs are going to be — that's your top. That's the top where you're going to be able to go." That's not necessarily — correct me if I'm wrong — but not necessarily the case within the RV and boat storage space, and that's where I think Gary wants to take it with RecNation. Is that a fair assessment on my part? Jim Blanda: I would say overall, yeah. RecNation has done a very good job of taking properties — like I said — they go for the more Class A, higher-end type stuff, and they know the market they're going for. They're going for your wealthier type of clientele where they're looking for convenience, security, and consistency. Those are their most important things. To someone who owns a million-dollar RV, whether it's $150 a month or $400 a month — now, it sounds like a big difference, but to someone who just wants to know that they're not going to have to do an insurance claim on their RV, that it's going to be there when they need it, that the gate's going to open — they're willing to make that payment. So yes, I think RecNation is taking the lead on finding the balance point on the rates, and I think that's why they've been pretty successful in acquiring these properties. Chris Berg: Well, again, we'll jump into that article in a bit. Today, RecNation is also doing third-party management for RV and boat storage, so I want to hear more about that. First, let's just jump into what you're seeing from investors — what's the conversation? I'm curious around depreciation. Are these guys able to go in and take bonus depreciation on these assets? What does that look like? Jim Blanda: Yeah, so you're not going to get that — that's the downside compared to self-storage. You have less buildings, so you have less to depreciate. Obviously you're going to get cost seg studies done and break it down to every piece of gravel you lay down, every single dollar, and that's how you're going to maximize the depreciation side of things. But it certainly is lesser than the self-storage space. Self-storage is a huge depreciation play, so you're not getting that as much in this space. How I look at it a lot too is: you're probably going into a more affluent market, you're getting a price on more of a land deal, and it's more of a covered land play with income until the time comes when maybe it's something to do something bigger. Unless you're doing that Class A full-blown development — that could be the highest and best use — but a lot of times you're taking a covered land play in a great market, and you might wait five years, ten years, for that apartment developer to come knocking and pay you 4X what you bought it for a while back. That, I think, is the upside there. What was your other question about the market as a whole — investor sentiment? Chris Berg: Yeah, I just wanted to get your thoughts on — obviously, if Goldman's going to put $500 million into RecNation, I'm presuming the returns are pretty healthy right now. So what are you seeing? What are you hearing? Jim Blanda: Yeah, the returns are very solid. A lot of what we're looking for — this is obviously a deal-by-deal basis — but a lot of what we're selling is like 6% to 8% cap rates on in-place income, with the ability to get to an 8% to 10%. That's really what we're seeing. So a lot of these are income plays where you're increasing the income. I would say when we first got into this space, everyone's assumptions were rent growth — they were putting in an assumption for rent growth. Over the last year and a half, that rent growth factor has gone almost stagnant, where they're just projecting flat rents. Or if there's an obvious competitor or clear play where they're below market, they'll show some rent growth — but not overall appreciation through rent growth, which has hurt some of the underwriting and return projections. I would say that's a direct correlation with RV and boat sales. Those were at peaks in like 2020, 2021, then you saw that dip off a little bit. That's now coming back up. I'm not sure if you saw that article, Chris — there was another article that came out, I think it was Camping World or something like that, saw a big jump in RV sales over the last two years. So it's no surprise that Goldman is putting money out there, because I think overall the fundamentals of the space have been there. There was just a little bit of lack of investment over the last year and a half, just due to the lack of projection and rental rate increases. But that is coming back now, with RVs getting off the lot and being sold again, interest rates slowly creeping back down. Chris Berg: I want to get your take on this thesis. You hear a lot more about going back to office — that's probably going to take place — but for maybe some of the older demo, semi-retired people… I was at a buddy's ranch recently and he's got Starlink. I just think Starlink changes the game. The fact that I can throw Starlink in my RV and be anywhere on the planet — it just changes the dynamics. Am I on track there on that thesis, or am I missing something? Jim Blanda: Funny that you brought that up. About eight minutes before we hopped on, I saw an article that the average first-time homeowner went from 29 years old, I think, in 1981, to now up to 38 or something like that. I'm 30 years old — a lot of my friends, colleagues, all of that — they have a similar mindset to what you just said. We're mobile, we can move around, we know how to use the technology. And I do think office is going to come back to some extent, but it's never going to go back to what it was before. There's definitely momentum going back toward moving around. A lot of my friends and our age group are wanting to get outside again. We spent a lot of our lives in the technology age, and people are wanting to get back out there, go to the outdoors again. So I think overall, fundamentally, for the next 10 years, you'll see that trend continue. Chris Berg: Yeah. And I think with syndications and where things are going with tokenization of real-world assets — you can be a 30-year-old and still buy into real estate and have that return, but not necessarily own with all the sometimes headaches of home ownership. So one last question about this, and we'll move into that article. A gentleman I know that's pretty heavy into RV and boat storage talks a lot about — "Hey, there's not a lot of depreciation initially, but then we utilize solar panels, and man, when we can find a good site with solar panels, I mean, I'm not paying taxes for years." Are you finding that as well, and have you done any of that with any of your clients? Jim Blanda: It's funny — Florida is actually not one of the biggest states for solar panels. A lot of what I see with people crushing it on the solar panel side is Arizona and California, where they're getting a lot of tax subsidies. So yes, we've seen that a lot, but it's going to be state-by-state driven. Are they giving the tax subsidies that other states are giving? I'm not hearing in Florida people wanting to throw up a bunch of solar panels. My brother works for a solar company, so I'll throw that out there to some owners and try to get him a couple of deals — and it doesn't bite as much here as it does in some other states. It all comes down to tax incentives, at least that's what I'm seeing. Chris Berg: Yeah, that's essentially the same thing he said. So before we jump into this article — because I do want to get your thesis on where you see this going — anything else you want to add or share that I haven't asked yet? Jim Blanda: No, I think that's pretty good. We can hop into the article. Chris Berg: All right, let's get your take on this. Just yesterday, announced in Bloomberg — $500 million raise with Goldman Sachs and RecNation. Gary's a great business guy. My opinion here is he's going to take this $500 million and do essentially what a Public Storage or an Extra Space is doing, but just in the RV and boat space. Jim Blanda: Yes, I completely agree. Like I said in the beginning of the call, this space is highly fragmented. I think RecNation has done a really good job of realizing that, and now they have the capital to go and deploy and buy up a lot of those properties. This space — I don't want to say exactly, but somewhere maybe like 50 to 75 properties — that's what RecNation owns. Now let's compare that to a Public Storage; Public Storage owns substantially more property than that. Now let's look at the breakdown of the current ownership: if RecNation is the largest with like 50 to 75-ish properties, and there are thousands of properties across the country, it means most properties are owned by individuals with one or two properties — they only own one or two RV and boat storage facilities. So what you saw in office, you saw in multifamily, you saw in self-storage — the people that can dump cash at those mom-and-pop owners are the people that get the deal. So I think RecNation, with this new raise of capital, is positioned very well to give solid offers to those owners, quick closes, all of that, to take ownership of those opportunities and grow their footprint. That's almost what we want to do on the brokerage side of things: we want to help the owners get out there, market their property, make sure they get top dollar, while RecNation is out there trying to gobble up all those properties. It's an interesting dynamic, and it's just everyone's trying to take these fragmented owners that own one or two and get them into a big portfolio, so eventually they can bring scale to it, efficiency, and then maybe sell or whatever they want to do. There's very little efficiency in this market, and you're seeing that come along. Chris Berg: You just read my mind, because as you were talking earlier about how the rates have kind of stagnated, but also if I get all these operational efficiencies on my bottom line, I've obviously increased NOI dramatically and now I've got this great portfolio. I just think he's doing a really, really nice job, and I'm excited to see where he goes with it. So anything else you want to add or share? And I guess I'd just ask you — $500 million — where do you see him deploying that capital? And is there anything going on in the state of Minnesota, because it's the Land of 10,000 Lakes? Jim Blanda: It's actually funny — when we first started, coming from Philadelphia and then Florida, Minnesota, that area, the Midwest, the Lakes area, was not an area we were focusing on. But yes, absolutely, there's a ton of properties up there and massive properties. What RecNation is going to have to do on some of those is get a little bit more creative and go out — a lot of their properties right now, I believe, are in Texas, Florida, and kind of along that line. It's going to require going out and developing. A lot of what I'm seeing right now — for the last 10, 20 years, people have been getting away with, like, grass parking lots, essentially illegal operations where you're parking boats and RVs in people's backyards, and there wasn't enough demand, so people were getting away with that. What we're seeing is those places are emptying out — people are not putting their equipment, their vehicles, there. So I think what it's going to take is Class A development. I'm not sure what RecNation's plan is, but I would not be surprised if Class A development is within that $500 million fund that they raised. In a lot of those markets, it's going to take some Class A development, because the Class A stuff is not there yet, but there's a demand for it. So I think that's going to be the big change: not only just looking at stabilized opportunities, but finding where you can get cheap land, doing a Class A development with the full-blown enclosed covered, security, gate, lights, all of that — because that's very clearly where the market's going, and what the investors on the back end want, your exit strategy, all of that. If you're doing your open parking yard, it's not getting the same attention it was even two, three years ago. So that's what I'm seeing. It's going to have to get a little bit more creative and probably a little bit more development. Chris Berg: Where do you see tech fitting into this space, and where do you see tech taking this space? Jim Blanda: So I think the reason that this space was under the radar and is now becoming a real asset class — and there's a lot of funds going after it — is because of the technology. Self-storage properties are typically run at, call it, 30% to 40% expense ratio. The ideal spot in the RV and boat storage space is by utilizing technology. All you have is a gate, and then people park under awning. So as long as every spot's numbered, you have video cameras, all of that, you can utilize technology to have people sign up, park their vehicles, get in and out 24 hours, and not have a person there. Unlike self-storage, where that can maybe hurt operational efficiency by not having someone on-site — bad reviews, all of that — in the RV and boat storage space, it seems like it's less of a factor. So I think technology taking over some of the management responsibility will be huge, because if you can take these properties and get the expense ratios into the low 20s, those are the properties we're seeing be very successful. You don't have that $100,000 of management payroll in there — maybe you just have a management fee as opposed to, like, a software fee. And I think it's also going to take the people that can do things in-house and create their own systems and processes — those are the ones that are really going to succeed and take over. Because like I said, if you can get those expense ratios off that 30% down to 20% — which is doable in RV and boat storage, it just requires scale and efficiency — those are the people that will be able to buy and really rinse and repeat. Chris Berg: What are you seeing as far as zoning? As I'm going out there looking for dirt for self-storage, typically we bump into zoning challenges. I'm just curious, what's been the reaction within municipalities and counties towards RV and boat storage, and how rigorous is the zoning? Jim Blanda: The zoning is tough. It's similar to self-storage in the sense that overall, they don't want the ugly stuff. They don't want a drive-up, non-climate-controlled facility with no gate, exposure to the road — it's just kind of an eyesore when you drive by. And just like in self-storage now, a lot of the municipalities and townships are requiring setbacks, fences, gates, façades — things to make it look like an apartment building but it's actually a self-storage building. We're seeing very similar stuff in the RV and boat storage space, unless you're in an industrial park, because you can utilize the industrial zoning and it's a little bit less traffic, so you can get away with that side of things. But if you're going to be on a main road, you're going to run into similar issues where they're going to want you to have a façade or maybe a concrete wall that you can't see into the property, so it makes it look clean on the outside. And a lot of these properties, too — municipalities don't have a set zoning code for it, so you have to go get that special use permit. It's very rare that you have month-to-month vehicle storage by-right — that's very rare. That's a light industrial zoning. You're going to be in an industrial park if that's the zoning you want. So you're probably going commercial, getting a special use permit for vehicle parking. Chris Berg: Got it. I want to do one last thing here with you, Jim, before we let you go — want to be respectful of your time. This is the RecNation website. I think one of the brilliant things that Gary's doing here is he's got RV and boat storage amenities — mobile RV prep service, cleaning service. If you want to own a facility, you can outsource — now third-party management. Just want to get your thoughts and comments on this. How much of a revenue driver is this in their business? Jim Blanda: I'm not sure exactly the individual revenue driver those things bring in, but I would say overall, what you want to do is create a lifestyle experience. The other big difference that I see between self-storage and RV and boat storage is the clientele you're selling to. In self-storage, a lot of times moving is a big driver for renting a self-storage unit — being in a city, a dense market, things like that, not having enough space in your home, owning a home and putting junk in there. Going to the self-storage unit is not typically a pleasant experience — people don't look forward to going to their self-storage unit. It's just not really the sentiment you have going there. For whatever reason, it's not fun — you're moving things, all of that. Whereas RV and boat storage, you're probably going on vacation, so you're coming and picking up your boat or RV to go do something fun. So I think what they're doing really well is making it like a lifestyle experience — they're catering to their clientele of, "Hey, you're coming here, we've got your ice, we can clean it for you." I'm not sure if they're doing repairs or not, but that's something we're seeing some other groups do — repairs and all of that — and making it look nice and clean, so when you're coming to vacation, everything looks good. They're spraying it down, they're keeping the tires pumped up, all of that. I don't know how much dollar-for-dollar, but that's how they're able to push the rent — I think you see it in the rental rate, most likely, is where you're seeing it. Chris Berg: Great stuff. All right, if people want to get a hold of you — first off, anything else you want to add or share, and then if people want to get a hold of you, how do they go about doing that? Jim Blanda: Yeah, I think overall — just something to add — what we're doing for a lot of owners in this space is just starting with evaluation. The space is a new asset class, and owners don't know what their properties are worth. So the only thing I would say is, if anyone is interested in evaluation of their property, that's what we're offering to owners free of charge, just so they have an understanding of what their asset is worth today. And then to get in touch with us, you can go to industrialstoragebrokers.com. You can shoot me an email — jim@industrialstoragebrokers.com. Or my phone number is 954-466-0655. Chris Berg: There's their website — we'll take you to the homepage as well, just so people can see what they're doing. Industrialstoragebrokers.com — check them out. Jim, great, great intel. We appreciate it, and we look forward to having you back, man. Thank you. Jim Blanda: Thank you, Chris. Thank you, I appreciate it. Chris Berg: All right, keep up the great work. We'll talk to you soon. This is the commercial real estate report. — END OF TRANSCRIPT —