A private Dallas-based real estate development firm has Texas-sized plans for RV parks that could produce “a new product type” of alternative accommodations.
RREAF Holdings announced Wednesday a $157 million deal to acquire and redevelop five RV parks in the southern United States along with plans for a second round of acquisitions and redevelopment this year for $550 million.
Those figures include the purchase price and the cost of a “vast” upgrade in high-end, resort-style amenities, said RREAF Holdings' chief investment officer Graham Sowden. “It’s designed to be an amusement park or summer camp-type feel for families.”
The ambitious plan is starting with the acquisition of five parks in Texas, Alabama and Florida. The second round of purchases is underway, Sowden said, and should be completed before the end of the year. Ultimately, the company plans to invest “several billion in this product type,” Sowden added. “We want to be the dominant player in the RVs arena.”
Phocuswright senior research analyst Robert Cole saw immediate advantages in the proposal’s relatively low development costs as compared with traditional accommodations. “In essence, it’s a BYOL – bring your own lodging – concept,” he said.
Challenges, however, are that it could prove highly seasonal, and it’s a niche marketplace holding limited appeal to traditional segments such as corporate or group business.
“The bottom line,” Cole said, “is that with a hot lodging market, everyone is looking for new forms of accommodation to introduce and capitalize on.”
“Booming sector of real estate”
Before this week’s announcement, RREAF had focused on developing housing communities and multifamily properties and acquiring and operating beachside resorts and extended stay hotels. Their new plans for “outdoor living” are intended to capitalize on what CEO Kip Sowden called a “booming sector of real estate for decades to come.”
An industry study from 2021 found that there are 11.2 million RV-owning households in the U.S., a 62% percent increase over the past two decades. The RV Industry Association attributes the upswing to retiring baby boomers and stronger interest from younger sets and digital nomads who enjoy outdoor lifestyles and have more freedom about where and when they work.
The median age for first-time RV buyers in 2022 was 32 — down from 41 just two years earlier, according to the association. The 18-to-34 age range now accounts for nearly a quarter of RV owners, helping to bump the over-55 set to just under half of all owners.
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Yet following a surge of sales during the pandemic years, an association report projected that RV shipments this year would be lower by a third from 2022 levels, in part because of fears over inflation and rising interest rates. Those concerns were offset in part by reports of strong attendance at retail RV shows and on dealer lots.
In announcing its deal, RREAF said it expected the RV industry to nearly double in value to $64 billion by 2024 and to reach more than $88 billion by 2028. Meanwhile, the company cited stats showing just 1.7 million RV pads have services like water, sewer and power.
“The RV sector has astonishing growth opportunities stimulated by the economy and the evolution of remote work and school options," Kip Sowden said. “With best-in-class management and highly amenitized options for our guests, we are creating a new segment in the outdoor living space and plan on being a significant player as we help it evolve.”
Amenities planned for these parks include resort-style pools, lazy rivers, rope courses, fitness centers, outdoor games, family entertainment facilities, golf carts, water slides, basketball and pickleball courts, mini golf, fire pits, outdoor kitchens, dog parks, onsite laundry, playgrounds, onsite boat and trailer storage, lakes for fishing, zip lining, and more. For people who don’t have RVs, the parks will offer deluxe cabins and converted “glamping” tiny homes or cabins.
“We’re creating a new product type”
Among the housing communities RREAF is developing are a pair of Jimmy Buffett-inspired Margaritaville communities in Galveston, Texas, and Myrtle Beach, South Carolina. The themed retirement communities are a comparison Graham Sowden used more than once in a conversation with PhocusWire about the company’s long-range plans for RV parks, which include creating its own brand with a name it hasn’t announced yet.
“They'll all be branded under our own kind of flag so that our guests will know when they're staying at one of our parks that they'll get the lazy river and the resort-style pool” — not to mention restaurants and bars and family centers with arcades, he said. “Somebody who's going across the country and is able to stop at one of our locations along the way can get that same experience or that same vibe. You always know kind of exactly what you're going to get.”
Plans include buying and extensively renovating existing RV parks along with building new projects in attractive locations where the company can find 80 or more acres for its extensive amenities and 400 RV pads.
RREAF saw an opportunity with RV parks that it couldn’t find from other real estate ventures, Sowden said.
“With everything that's been going on in the office and retail and multi-family sectors, we've really taken a hard look at some of the fundamentals of RV parks and campgrounds and found that RV parks as an investment thesis can be extremely attractive,” he said. “Some of the more attractive investment properties that I've ever seen.”
We look at it as though we're creating a new product type. There have been RV parks in the past that have been well amenitized or [had] kind of amusement park themes, but nothing has been done on an institutional level like what we're contemplating offering here.
Graham Sowden - RREAF
In the view of RREAF and its investors, traditional RV park owners have been “leaving a ton of value and meat on the table,” Sowden said. Many of the parks, for example, have only one main season, as in Florida, where the parks fill up in winter with snowbirds. RREAF expects its amenities could draw summer crowds of families whose children can enjoy the activities.
“We want to create, year-round experience and sales,” Sowden said.
The price point will be different too. While some parks charge as little as $20 a night for not much more than an electric and water hook-up and shady campsite, RREAF’s expanded amenities mean its prices could range “anywhere from $80 all the way up to $200,” depending on the market and park.
“I really do believe that over the next four or five years you'll start seeing a lot more institutional interest pouring capital into this space,” Sowden said.
Within the past year, the RV rental marketplace Outdoorsy has expanded beyond RVs to acquire two campgrounds and offer other accommodations such as tents, cabins and tiny homes. It launched this week a $30 million fund to provide financial assistance for buying upscale glamping tents.
RREAF’s immediate plans include finalizing site and construction plans on its initial acquisitions. It estimates the branding will be in place across all parks approximately 12 months after takeover. Construction for all the parks is expected to be completed and operating at total capacity in the second half of 2025.
Ultimately, the company intends to create its own RV management company while working with several “dominant players in the space,” Sowden said. He envisioned the cabins and tiny homes becoming available on sites like Airbnb and Vrbo.
Whether RREAF can ever influence interest in RV vacation stays the way those businesses did for peer-to-peer home rentals, only time can tell. But Sowden feels his company is heading into a new frontier of sorts.
“We look at it as though we're creating a new product type,” he said. “There have been RV parks in the past that have been well amenitized or [had] kind of amusement park themes, but nothing has been done on an institutional level like what we're contemplating offering here.
“The space as a whole is very fragmented with only a handful of major owners and the rest being very mom-and-pop, and we're trying to consolidate some of that fragmentation and create an institutionalized feel alongside this new brand concept that everybody with an RV is going to know and love.”