Not Your Father's Campground: Investors Pile Into Luxury RV Parks, But Rash Moves Can Mean Bumpy Rides

RV parks have long been part of the American zeitgeist, but the lure of the open road has traditionally led travelers to utilitarian campgrounds where an element of roughing it was still at play. Now, a newer, fancier version has entered the chat, and investors are rushing to cash in.

Luxury RV resorts with hotel-style amenity packages are the latest segment to capture the attention of commercial real estate. Interest in the burgeoning sector exploded after the onset of the pandemic, as remote work patterns and shifting demographics gave way to new clientele, pushing demand to new heights.

The luxury trend has a “long runway,” according to those jumping into the space. Yet some longtime players caution that newcomers caught up in the frenzy might be behind the eight ball, chasing demand that has already begun to fade as the world settles into a new normal.

“All of the sudden, we’ve gone through the pandemic, things have started to level off, and you still have a lot of investor demand — a tremendous amount,” said Darby Campbell, chairman and founder of Safe Harbor Development. “In my opinion, they’re a little bit late to the game.”

Over the past three years, RV parks that used to encompass little more than pad sites and utility hookups have increasingly been rebranded as resorts. A slew of luxury amenities — resort-style pools, lazy rivers, arcades, bowling alleys, full-service restaurants and bars, mini-golf, basketball and pickleball courts, and dog parks — are attracting a new base of customers seldom seen at campgrounds.

“There is a lot of demand that has been created that has never been seen … and I think it’s got a long runway,” said Kip Sowden, chairman and CEO of RREAF Holdings, a Dallas-based firm that recently launched an outdoor living platform. “We are entering the space at a time where what we are planning on doing doesn’t really exist, so we are creating — to a certain degree — that market.”

The outdoor living sector, which also includes marinas, is entering a new stage where mom-and-pop ownership is waning and larger institutional groups are stepping in, industry experts told Bisnow.

RREAF, more known for its focus on the multifamily and hospitality sectors, announced a $157M deal in August to acquire and redevelop five RV parks in the southern United States, as well as plans for a second round of acquisitions and redevelopment totaling $550M this year. Wall Street investors like KKR, Starwood Property Trust and Sun Communities doubled down on the sector after the pandemic helped reveal a vast disconnect between supply and demand.

“The RV park business is in the same place that self-storage was probably in the mid-’90s — a lot of fractured, inefficient ownership, and not many institutional players in the space,” said Stuart Fink, managing director at Provident Realty Advisors. “We are at a great point in the life cycle where an experienced developer … can go in and make things happen.”

The rise of remote and hybrid work freed many workers from the shackles of their desks, and communities lifting pandemic restrictions unleashed a wave of pent-up travel demand. Some of those vacationers decided to try camping, a classic American pastime, but one that had historically been popular with families or retirees. 

“The pandemic has no doubt changed the profile of who our customer is,” said Yogi Singh, partner at National Land Lease Capital, a private investment firm that owns a dozen RV parks across the U.S.

More than 6.4 million households camped for the first time in 2022, down from 10.1 million in 2020 but still well ahead of pre-pandemic figures, according to data from Kampgrounds of America. Camping accounted for 32% of all leisure trips taken last year, with more than half of travelers including camping in some or all of their travel. 

The pandemic also had a marked impact on the sale of RVs. More than 600,000 wholesale shipments of RVs were recorded in 2021, up 19% from the previous record of 505,000 in 2017, Forbes reported.

“People couldn’t stay in hotels, they couldn't have their traditional vacation,” said Anthony DiPonio, associate at Hotel & Leisure Advisors. “They wanted to create their own vacations, so they went out and bought RVs.”

The sudden surge of interest in RV travel revealed a shortage of campgrounds. Supply would need to increase at a rate of 7% annually to keep pace with 2022 levels of demand growth, according to a report DiPonio authored for Hospitality Net. It also highlighted an opportunity in a sector historically dominated by small operators.

“A lot of these mom-and-pop RV parks have been around for so long, they aren’t going to change what they’re doing,” he said. “They are not really willing to upgrade — they’ve been around for 30 years, and it’s working well for them.” 

That would seem to open opportunities for a new kind of upscale glamping consumer.

But foraying into the RV park space isn’t as simple as it may seem, and that could cause some newcomer investors to jump ship, Singh said. Navigating the lack of inventory is just the first step. Once a site is secured, then comes the necessary rezoning, which can be complicated in even the best scenarios.

“The biggest players in our market, let alone new entrants, have a very difficult time getting additions and new projects zoned,” Singh said. “We will see attrition, unfortunately, but the opportunity will be for … operators that can pick up where somebody without the necessary experience might not have been able to make the required environment and attraction.”

Provident announced in early October it had acquired two sites in Texas where it plans to build high-end RV parks. The company, which launched its platform in partnership with lender Trez Capital, intends to develop five parks a year, each of which will cost about $15M and include 200 RV pads on average, Fink said.

Fink has already been getting inquiries from developers who entered the space earlier in the pandemic but couldn’t get the necessary approvals to carry out their plans.

The high barrier to entry should keep competition at bay, said John Hutchinson, co-CEO and global head of origination at Trez Capital.

“That will make it difficult for the market to get overbuilt,” he said. “Zoning is not going to be easy, and you have to have the knowledge and experience to find the sites, get them zoned and ultimately develop them.”

From the perspective of experienced players like Campbell, though, overbuilding has already occurred. Newcomers made rash decisions based on a perceived supply-demand imbalance that has begun to normalize since the height of the pandemic, some building resorts in areas where they aren’t needed, he said.

“You can’t just build the damn things anywhere and think people [will behave] like they did during the pandemic where they just wanted to get as far away from home as they could,” he said. “That’s not where we are now.”

Despite the influx of players, Campbell remains bullish on the space. Safe Harbor teamed up with Monarch Alternative Capital to form Go Outdoors, a platform that will acquire, develop and operate marinas and RV resorts across the U.S. 

The partnership should take the valuation of Safe Harbor’s portfolio from close to $300M today to between $500M and $1B over the next two years, Campbell said. 

The company acquired a 39-acre distressed retail property in Pigeon Forge, Tennessee, and invested $45M to turn it into a Camp Margaritaville, a line of high-end RV resorts developed by the late Jimmy Buffett.

The property includes 195 paved RV sites, a 79-room lodge, a 120-foot lazy river and a 20K SF entertainment center, among other amenities, and opened in fall 2022.

“A lot of lenders have gone home, and a lot of private equity has quit investing for the time being, so we feel like we’re in a good space to capitalize on some of the lack of funding that people are going to see or the overbuilding they may have done,” he said. “I don’t think we’ve reached the bottom yet of these rural, overbuilt, overpriced parks.” 

Sowden has similar ambitions. RREAF does everything at scale, he said, and outdoor living is no exception. In addition to the five parks the firm has already acquired in Texas, it plans to eventually have 25 to 30 parks at various locations along the Eastern Seaboard.

“Once we’ve chosen a vertical, as we have with outdoor living, we will commit tremendous resources to it,” he said. “We want to dominate this space within the next 36 months.”

Whether commercial real estate remains committed to outdoor living is yet to be seen. But Singh said the sector’s resiliency will keep many investors engaged for years to come.

“Those folks that see an opportunity at least to create another [arrow in their quiver], so they have a defensible position if we do experience another downturn, will stay in the space,” he said. “The economics, the return profile and the stability of the industry that we’ve seen tells us that.”