Marina Dock Age, May/June 1996

Decide if Dry Stack Storage Makes Economic Sense
by Dennis P. Kissman

I have heard presentations and read articles on the attributes of adding dry stacks, or valet boat storage as I refer to it, at marinas as an alternative to increasing berths. The theory behind this is that it is both less expensive and more environmentally sensitive to add racks and move smaller boats into them. Doing that makes slip room available for larger boats and sailboats that can not fit into racks, thus reducing the need to increase the water surface area of the marina. I am not about to challenge that thinking but I do think it is appropriate to look at the economic impact of that decision in order to make an intelligent choice as to whether it is right for your marina.

Ask yourself three questions: First, is your market and future, primarily composed of power boats? Second, if you add a dry stack storage facility, can you make it large enough to be economically feasible and still have enough upland space available to accommodate the increased parking requirements and boat staging areas, both in water and on land? Third, can you reconfigure your berths that currently contain these smaller boats in order to accommodate the larger boats you anticipate attracting? If you answer yes to these three questions, then adding the dry stack facility is probably a good move.

What I want to do is suggest how you can approach this decision by a review of the economics involved. In order to do this I am going to take the liberty of making some assumptions that are not necessarily applicable to your marina. However, if you use this approach and apply your own variables to the assumptions, it should give you some solid answers. Assume you will construct a 240-rack dry stack building. (Many experts in the marina industry including myself feel this is the optimum size to get maximum return on your investment.) By building this structure, you will be able to attract 80 existing berth holders to the new facility. Also assume the average boat length and berth converted from the berths to rack storage will be 25 feet. Finally, assume stabilization and economic return at 90 percent occupancy.

Let’s go back to the original three questions and construct the method for making a decision. The first question is easy to address: If your market consists of sailboats and that is the future growth potential of your marina, then dry stack boat storage is not the answer. Sailboats do not lend themselves to this type of storage facility.  

The second question raises several important issues. Using the original assumption that you will construct a 240-rack facility where boats are stacked four-high in lengths of up to 35 feet, you would need approximately one acre of space. You must also consider the additional parking requirements. This requirement generally depends on local zoning issues and varies considerably, although one space for every two racks is a good rule of thumb when making your decision. In the example, this means you need to provide an additional 120 parking spaces. Estimating 125 parking spaces per acre of expansion, you will need a total of about two acres for the project.  

Now that you have determined that you have enough space to expand, look at the costs involved. Rack manufacturers usually quote a cost from $2,500 to $3,000 per boat space depending upon the type of building chosen and local building codes. I will assume a fully enclosed building and use the high end of the scale to be conservative. Therefore, your building and racks will cost $720,000 to construct. In order to get a building permit, you must also put in the additional parking spaces. If each paved and striped parking space costs $2,000, the parking lot will add an additional cost of $240,000.

You still are not finished because most likely your marina will not have the proper forklift. A new forklift that can lift up to 20,000 pounds and have the capability of a negative lift costs about $170,000. Lighter capacity forklifts can get the price down to about $125,000. If you hope to cater to boats up to 35 feet, the larger capacity forklift would be the right choice. It would be reasonable to add another $150 per rack to cover costs not detailed such as marketing costs to launch the new service, as well as beefing up the bulkhead at the launch area to allow the combined weights of the boat and forklift to come to the edge of the water. This will add another $36,000 to the project.

In this scenario you have a cost of $4,858 per rack, or a total cost of $1,166,000. This is a 61.9 percent increase over the price of the rack alone.

Now look at the income you can expect based on the previous assumptions. Typically, rack rates are less than berth rates. (I cannot understand this reasoning because in reality the marina is providing much more service and peace of mind for the boater than if the boat is kept in a berth.) For example, use a composite rate of $6 per foot per month. With the average boat length at 25 feet, the monthly fee would be $150, or $1,800 annually. At 90 percent occupancy, expect a total annual revenue of $388,800 and a net operating income of 42 percent, or $163,296. This represents a 14 percent return on the original investment. Continue »