Big Berth Bonanza

Million-dollar-plus prices for homes and condos startle few

in Southwest Florida these days. But now some homes and condos for boats are

cracking the million-dollar barrier as a shortage of slips, especially for big

boats, develops.

As more baby boomers and others with time and money on their

hands retire here to enjoy the area’s main asset—the Gulf—tighter environmental

restrictions and a limited supply of waterfront are making it harder to build

marinas and docks. As a result, prices are increasing dramatically, developers

and real estate brokers say, especially for slips that can hold yachts. Investors

are taking note, buying aging marinas that traditionally have rented space to

the public. Old marinas are being converted into private clubs that offer

luxury condos and amenities for purchasers along with expensive slips for

bigger boats.

The trend bolted upward in the spring when developers

announced deals with two aging marinas in Naples. EcoGroup of Tampa acquired

Wiggins Pass Marina, and WCI Communities of Bonita Springs contracted to

purchase Boat Haven. Plans are to create mixed-use projects likely to include

high-end residences and high-priced slips for sale.

The deals follow those by other developers like Naples Boat

Club, a limited partnership run by five St. Louis and Naples businessmen. In

1999, the partnership acquired Turner Marine from the Turner family and

commenced work on the Naples Boat Club, building 10 luxury condos, 47 premium

wet slips and 150 dry slips. So far, the group has sold “all but a handful” of

the wet slips for up to $900,000 apiece, according to John C. Swanson, chief operating

officer of the partnership, and all 10 residential condos for up to $1.8

million each. “This would be analogous to Palm Beach or Boca Raton. It’s a very

upscale market,” says Swanson. “But you’re not buying an apartment there

because you have a pristine golf course and birds outside your door. You’re

buying an apartment because you’re on the bay and you have a boat, and if

somebody fires up their diesel in the morning, it makes you feel good.”

Besides facing strict requirements for manatee protection,

marina developers grapple with tight government regulation involving

environmental concerns such as fuel and sewage spills and toxic anti-fouling

paint used on boat bottoms. It has become difficult to build a new marina,

observers say, and it’s not easy to renovate an existing one. That’s partly

what has made existing marinas such hot properties.

“The marina business is a specialty business and an asset

that cannot be easily reproduced,” says Swanson. “Buying any kind of waterfront

property is virtually impossible. Even if you can buy it, getting it permitted

is problematic. So you’re far better off buying an existing facility with

vested rights and cleaning it up.”

Traditionally, boat slips have been rented short-term. But

an increasing number are being sold, according to George B. Atkinson, a

property analyst who’s been tracking slip prices at CB Richard Ellis in Naples.

Partly, that reflects marina owners’ interest in making a big profit up front.

But it also reflects boat owners’ anxiety about securing long-term lodgings for

their craft. Some slips for big boats in Naples are priced at well over $1

million. In July, for instance, at Olde Naples Seaport (near the Naples Boat

Club), a 127-footer was listed at $1.5 million and a 90-footer at $1,095,000. The

15 luxury condos at the Seaport carry price tags from $1.7 million to $3.8

million; more than half have been sold since April.

Because of an acute shortage of slip space for larger boats

in Naples, and in much of the world, the price per linear foot has increased

“exponentially” with increasing boat length, according to Scott Dunnuck, a

partner in CB Richard Ellis. Slips locally sell for $2,000 to $5,000 per linear

foot, Dunnuck and Atkinson say, but some berths for bigger boats have sold for

$6,000 to more than $12,000 a foot. Rental rates have been increasing at a clip

of three to seven percent a year.

“The squeeze here reflects global conditions,” says Todd

Turrell, owner of Turrell & Associates, a marine and environmental

consulting service in Naples that has worked on many local dock projects.

There’s been a worldwide boom in so-called mega-yachts—ultra-luxury craft over

150 feet in length. “What’s happening in Naples with the 60- to 80- to 90-foot

boats is happening on a worldwide basis with mega-yachts 150 feet and over,”

Turrell says.

Gordon Pass, the relatively shallow inlet that leads to

Naples Bay and the Gordon River, can’t accommodate the bigger boats. As a

result, globe-trotting visitors with mega-yachts, such as Greg Norman, must

anchor offshore and use an onboard helicopter to get back and forth, says

Turrell, who has a client in New Zealand with a 210-foot yacht that carries a

turbo-powered seaplane for shore excursions.

To get in on the action, some marinas are replacing smaller

slips with bigger ones, which reduces the total number of slips available.

Turrell is building several new 100-foot-plus slips at Port of Call Marina in

Naples to replace 25 smaller boat slips, for instance. Even as the supply of

slips shrinks, demand is increasing—causing fears that some less wealthy

boaters will be shut off from the Gulf, but creating a bonanza for marina

owners.

“It’s directly related to the baby boomers,” says Scott

Hanson, who with his father, Darrell, bought Salty Sam’s Marina in Fort Myers

Beach three years ago. “A lot of them are becoming full-time residents. They’re

looking to enjoy the money they’ve accumulated and to enjoy the water.”

The Hansons renovated and expanded Salty Sam’s, which now

has 150 dry slips and 88 bigger and better wet slips. They’ve received numerous

queries from boat owners in Collier County hard-pressed for dock space and

looking to move north, Scott says.

The Hansons know the feeling all too well: The Salty Sam’s

boat brokerage they operate at Boat Haven in Naples will have to move once WCI

proceeds with redevelopment. Boat sales have been declining recently, and

Hanson has been unable to find new space for his brokerage at an affordable

price in Naples. “We’ve been looking for about two years,” he says ruefully. “I

had a realtor tell me that the only thing harder to find is zoning for a

cemetery.”

Several developers have approached the Hansons in Fort Myers

Beach, but the owners are staying put for now, bolstered by a firm rental

market. Rental rates have increased from $7 a foot to $10.40, Hanson says. He

also considers the marina a good long-term investment. “There is a potential

some day to be developed into a waterfront community,” he says. “I think we

will see more and more development up this way.”

A number of luxury condo-marina projects, many of them new,

exist in Lee and Charlotte. Realmark Group’s Burnt Store Marina in Punta Gorda

includes villas, 475 wet slips and 200 dry slips. Upscale marinas in Lee

include Realmark’s Cape Harbour, with 76 deepwater slips in Cape Coral; Gross

Pointe Development’s Tarpon Point Marina, also in Cape Coral, with plans for a

shopping center, hotel, condos, gated communities and 175 wet slips

accommodating boats to 75 feet; and WCI’s Gulf Harbour, a 547-acre development

in Fort Myers with a 190-berth marina.

Delays in getting a manatee protection plan approved have

made it difficult to obtain permits for marina work in many parts of Lee. In

Collier, getting permission remains an arduous but somewhat easier process,

according to Turrell. At one marina where he consulted, it took two years to

get permission to remove 200 slips—“somewhat amazing when you realize we’ve

eliminated 200 slips and eliminated boat houses and old, creosote pilings,” he

says.

On Vanderbilt Beach Road in Naples, Turrell is building

slips for a marina to serve residents of Regatta, a high-rise luxury condo

project by Signature Communities. It’s taken more than four years to get

permits, he says. Just obtaining permission to extend an existing dock on a

canal behind a single-family home can be a grueling process, he notes, although

he adds that his business hasn’t suffered. In fact, owners of waterfront

property appear to be pouring money into improvements, choosing fancy extras

such as concrete floating docks (which cost twice as much as traditional wooden

docks but go up and down with the tides, making it easier to get on and off

boats). “I don’t think it’s an exaggeration to say that we’re working on eight

out of 10 waterfront parcels in Collier right now,” Turrell says. Although

permitting might speed up in Lee once disputes between developers, government

and environmentalists over manatees are resolved, few predict that marina

construction will ever approach its once wide-open pace.

As a result, the financial incentive to sell can be almost

irresistible for owners of existing marinas. Buyers haven’t disclosed purchase

prices, but sources estimate that the Boat Haven and Wiggins Pass Marina

properties may have sold for $23 million apiece. “The underlying value of the

land is not supporting a traditional public marina,” Atkinson points out. “It’s

become so valuable that it will support the prices paid for a residential

development or mixed-use community. The guys who have run the marinas for years

are cashing in on the jackpot.”

Edward R. Oelschlaeger, president of EcoGroup, hopes to

obtain a zoning change at Wiggins Pass Marina so that he can build two towers

with 158 units to accompany a private marina that could have 45 to 50 slips for

boats up to about 55 feet in length. Oelschlaeger, whose EcoGroup has developed

real estate from Sarasota to Naples for 15 years, lives next door to Wiggins

Pass Marina in Pelican Isle Yacht Club, which he began building in 1994.