If the weather is nice, more than a few people are likely to spend today relaxing on their boats moored in Southern California harbors. But Harry L. Nelson Jr. worries that, for some of the boaters, it will be their last such New Year's Day visit.
Nelson owns six marinas and claims to be the largest private marina operator on the West Coast. His marinas, with a total capacity of 2,400 boats, are in Ventura, Oxnard, Alameda, San Diego and Ft. Bragg in California and in Cabo San Lucas at the southern tip of Mexico's Baja peninsula.
On average, he enjoys a 91% occupancy rate at his facilities, which operate on beachfront properties leased from local government agencies. So one might think that Nelson, 62, who runs the marinas through his Almar Ltd. holding company in Rolling Hills Estates, need only sit back and collect the rent.
The trouble is, occupancy at Nelson's marinas, notably in Ventura and San Diego, is starting to slip--no pun intended. Nelson blames the drop on the weakening economy and his ever-escalating costs, which he passes on to his tenants in the form of ever-escalating rents. And he frets that, as the economy remains sluggish, more and more people who owned boats during the go-go '80s will now be forced to sell them or put them on trailers--creating more vacancies at his marinas.
"Right now, I'm concerned about Ventura, because in the last two or three months, the occupancy rate has gone from about 97% to 89% or 90%," Nelson said. His marina there, called Ventura Isle Marina, has about 700 berths.
"We're seeing it by delinquent receivables (late rental payments), and in what I call a lesser use of your boat," he said. "The activity in these two harbors"--Ventura and nearby Channel Islands--"has in my view substantially fallen off from what it was nine months ago."
Nelson's situation illustrates how even a somewhat sheltered business--boaters have only a few marina operators to choose from in many harbors--can be pinched by a slowing economy. That's because a boat, after all, is not a necessity for most people and is an expensive item that can be forgone if money gets tight.
Marina rents can account for a quarter of the yearly cost of maintaining a boat, Nelson said. Even if a boater rents one of Nelson's cheaper berths in Ventura for $235 a month, that's $2,820 a year, or 25% of the $11,280 in total annual costs. So if the boater uses his vessel only twice a month, that's nearly $500 per ride. (The cost varies widely, of course, depending on the type of boat and how often it's serviced.)
