John Hutchinson: The Growing Appeal of Luxury RV Parks for Commercial Real Estate Investors
After a long day on the road, drivers of recreational vehicles seek respite at RV parks. These destinations have traditionally ranged from basic dirt lots to those with water and electricity hookups. However, in recent years, there has been a noticeable improvement in the quality of these spaces.
This trend has caught the attention of commercial real estate investors and lenders. Connect CRE spoke with Trez Capital’s Co-Chief Executive Officer & Global Head of Origination John Hutchinson to gain insight into this growing interest in luxury RV parks.
Q: What exactly are luxury RV parks?
A: Luxury RV parks offer designated spaces for people traveling with recreational vehicles to stay overnight or longer periods. These properties provide access to activities, events, entertainment options such as outdoor seating areas and amenities like resort-style pools and fitness facilities.
Compared to traditional campsites that typically have unpaved or asphalt-covered spots, luxury RV parks feature 100% concrete paving and individual sanitary sewer hook-ups for each space. They also offer heightened security measures such as surveillance cameras throughout the facility and lockable entry gates.
Q: Why are these properties becoming attractive investments?
A: The COVID-19 pandemic has led more people towards remote work opportunities which sparked an increase in demand for travel accommodations like recreational vehicles (RVs). This trend is expected to continue post-pandemic making it an appealing investment opportunity.
Additionally, compared to traditional vacationers who only stay temporarily at campgrounds during their travels; long-term residents now make up a significant portion of visitors at these upscale sites providing stable income potential over time.
Furthermore, as seen previously with self-storage properties’ evolution from mom-and-pop operations into institutionalized ownership; we can expect similar growth within this asset class attracting more sophisticated investors looking for new opportunities beyond conventional property types.
Q: How does financing an RV park differ from other real estate assets?
A: The financing process for RV parks is similar to other property types. We evaluate costs, cost per unit, and returns on investment when considering a project.
At Trez Capital, we prioritize selecting the right partner for any venture. For instance, our partnership with Provident Realty Advisors has been successful in developing two luxury RV properties in Texas – marking our first entry into this market segment.
Provident’s forward-thinking approach towards identifying new opportunities and transforming them into thriving community developments makes them an ideal collaborator. We are confident that their expertise will translate well within the RV park space as well.
Q: What is your outlook on this asset type over the next 12-24 months?
A: While it may take about five years to see significant growth within this asset class; current trends indicate positive signs of progress.
With changing travel patterns and remote work becoming more prevalent; there will be a continued demand for housing options like luxury RV parks catering to these needs. Investors should keep an eye out for upcoming projects such as those by Provident Realty Advisors mentioned earlier which could provide valuable insights into navigating this emerging market successfully.
