Recent hurricane activity aside, they provide tremendous opportunities.
The perception remains that waterway communities market themselves; apartment owners and managers fortunate enough to operate one of these well-located communities know there’s more to it than just sitting back and enjoying the gorgeous views.
Simply put, waterway communities have some unique maintenance and operational needs, including boat slips, stops along water taxi routes, seawall maintenance and salt build-up. However, managing these needs well can create unique ancillary revenue opportunities, strong rent growth and hefty returns.
Waterway communities provide an extraordinary resident experience, yield significant monthly rent premiums and reflect well on the brand. To maximize the return on these coastal gems, it is important to ensure operations, acquisitions and development teams take into account all of the unique aspects of a waterfront community.
Premiums at waterway communities can range based on the apartment home, and because of their prime location, occupancy rates are typically higher compared with offshore. This presents one of the softer hurdles to navigate: Pricing.
Homes located on the lower floors of a community in Fort Lauderdale, for example, which only provide views of the Intracoastal Waterway, won’t command as much as a top-floor home with panoramas of the Intracoastal and the Atlantic Ocean. While many apartments offer a water vista of some sort, there is an opportunity to assign value to each partial view and command higher rents based on the best views.
Specialized Development and Maintenance Expertise
Development, construction and maintenance teams undoubtedly have increased responsibilities at waterway communities. Development teams must partner and work closely with local professionals who understand particular construction needs. From operating a marina and implementing boat slips to ensuring the seawall will provide the necessary protection, an amplified level of expertise is needed.
Managing a community with a seawall requires an understanding of its interworkings and the ability to diagnose areas of potential concern. These walls often require reinforcements to remain fully functional and extend the longevity of the marina they are protecting. This is not an area to ignore.
Developers and onsite teams must also consider the amount of moisture and salt in the air, which requires the use of rust-prohibitive materials such as stainless steel, other rust-resistant alloys and the utilization of concrete instead of wood.
Considering most waterway locales are in high-wind zones, secure structures that won’t shift in a hurricane or a tropical storm are a must. The grading and pitch of the community also must be a prime consideration to prevent flooding. Barrel-tile or metal roofs are recommended because they are wind- resistant, and all windows and railings must be impact-resistant. Activity from Hurricanes Harvey and Irma offer a reminder that it’s also important to have formal emergency plans in place for major storms.
Maintenance teams are frequently asked to powerwash the boardwalks near the marina to eliminate fish odors, boat fuel, bird droppings and the like. Other common occurrences include oil slicks, boaters cleaning fish while docked in the slips and a bevy of requests from boat owners. Boat owners will expect concierge-level service.
For those set to develop or acquire a waterway community with a marina, it’s advisable to conduct an operator survey of other marina-owning communities, condo and homeowner associations in the area to understand the facets needed to operate it.
Waterway communities also have to clean exterior windows more often. Most land-bound communities do so every year or two – or perhaps only as part of a repainting process. On the water, you’ll likely need to pressure clean the windows much more regularly – perhaps once per quarter – because of a salty, brackish buildup caused by the sea spray. Preserving the water views is a key facet in retaining residents and growing rent premiums.
Windows in tropical and sub-tropical climates also produce glare and contribute to warmer indoor air temperature-related issues.
Marketing waterway communities has its idiosyncrasies as well. If on the water, chances are you may be off the beaten path and not in the urban core. Your entrance is often not along a main road. That means your team has to be thoughtful about directional signage and ensuring the community is visible from the main road, at least in some capacity, so prospective residents can find you. Your marketing content must precisely explain where you are on the water and how to get to the leasing office.
Another consideration in marketing waterfront communities is the local area. Many coastal locales are in transition and don’t yet qualify as a secluded slice of paradise. Communities in Palm Beach County, for instance, exude a different vibe than the beaches in Fort Lauderdale and Miami to the south. Many of the areas have not yet experienced re-gentrification and the influx of booming businesses to support the higher rents. The older communities possess magnificent waterfront views and, at some point, those views may reside in transitional neighborhoods that will be considered coastal treasures. Developers have to know how to spot up-and-coming locations and take advantage of land deals at the right time.
Lucrative Opportunities for Developers
Waterfront communities in these neighborhoods present lucrative opportunities for a developer or buyer. If they can initially acquire land or an existing community for a lower rate, they can reap the benefits when the surrounding neighborhood completes its transition to a desirable locale.
Waterway developers often consider denser areas that have more land available. St. Petersburg and Tampa are among the attractive areas in Florida that continue to have undeveloped waterfront land. As always, it’s important to measure the asking price for the land—typically high—against the long-term rent growth potential in the area and determine if it will produce the desired ROI.
So, for those who believe managing a waterway community involves nothing more than tiki bars, yachting and a tropical cocktail, there are still a few things to consider. Fortunately, handling those considerations efficiently produces strong results that are well worth the effort.
Dionne Van Druff, the Vice President of Operations at Mill Creek Residential.