Wealth Wave + Larger Yachts = no docks!

Wealth wave keeps yacht industry sailing...

Ever more lavish vessels the norm as superrich race to outdo each other

By JANE SUTTON
Reuters News Agency
Monday, February 21, 2005

MIAMI BEACH, FLA. -- As the rich get richer and more numerous, the yachting industry is enjoying a frenzied race for bigger and ever more ostentatious vessels.

"The market is on fire right now," said yacht broker Jim McConville of International Yacht Collection in Fort Lauderdale, Fla. He usually does two or three deals a month, but is currently working on five.

Three hours after the annual Yacht and Brokerage Show opened on the weekend in Miami Beach, Fla., he got an offer for Full Bloom, a four-deck, 124-foot Trident with glossy mahogany fittings and a Jacuzzi on the fly deck. The owner is asking $9.9-million (U.S.) and has had it only four years.

"He's moving up to a 180-footer," Mr. McConville said.

There are 592 superyachts 80 feet and longer on order at shipyards around the world, up from 445 last year, according to industry publication ShowBoats International. German yacht builder Lurssen is making 10 of them and they average 234 feet long.

"There's been an explosion in the last 10 years in the size and dollar value of these boats," yacht show organizer Kaye Pearson said.

The superyachts start at a few million dollars and rise to more than $200-million. Owners generally spend up to 10 per cent of the vessel's cost each year to run them -- including maintenance, fuel, dockage, provisions and crew salaries.

They rival the most posh mansions in furnishings as well as size. Some have helipads, wine cabinets, swimming pools, gyms, massive crystal chandeliers and onyx countertops.

"They want elegant, 99 per cent of the time, on any size boat," said Zak Kadosh, who designs interiors for IK Yacht Design in Dania Beach, Fla.

This year's hot accessory is a $50,000 satellite system that provides wireless high-speed Internet access and voice-over-Internet phone service far out at sea.

For the buyer with more money than time, Millennium Super Yachts is asking $28-million for its 140-foot offering The World Is Not Enough, billed as the world's fastest yacht.

It sleeps 10 passengers and a crew of eight, has burled walnut walls, marble and alabaster bathrooms, two Jacuzzis and several 42-inch plasma televisions. It travels at 70 knots, making a three- or four-hour tour out of a voyage that would take most yachts 15 to 20 hours.

"A lot of yachts have to travel all night. Half the crew is up all night long and the next day they're not ready to take care of the owner," Millennium's John Schmiemann said.

The mega-yacht phenomenon is mainly driven by the general rise in wealth. Worldwide, 7.7 million people had assets of more than $1-million at the end of 2003, according to the Merrill Lynch/Capgemini wealth report.

Forbes magazine lists 587 billionaires on its latest ranking of the world's richest people, 64 more than a year earlier. Their combined net worth soared to $2.47-trillion in 2004, up from $1.82-trillion a year earlier.

Russia's transition to free enterprise has created so much new wealth that Yachts International magazine has launched a Russian edition. The U.S. dollar's weakness has made American luxury yachts a bargain for Europe's well-heeled.

"All the Europeans are coming here to buy boats at 30 per cent off," Mr. McConville said.

Some U.S. buyers who felt uneasy about frivolous luxury during the sombre aftermath of the Sept. 11, 2001, attacks are embracing ostentation again, brokers said. Baby boomers who sold their companies and made their fortunes are getting on in years and feel entitled to a reward.

And once they buy a yacht, odds are they will trade up. Russ Rykse estimates that more than 70 per cent of boaters who finance their vessels with his employer, Offshore Financial, come back later to finance a bigger one.

Envy and competitiveness are certainly part of the bigger-is-better race, but so is the ability to grow comfortable with what once seemed lavish, Ms. Pearson said.

"Once you experience a certain level of luxury, at first it's exciting, it's wonderful, it's the best thing you've ever known. Then you see a friend with a bigger stateroom and a king-sized bed . . . "

Those in the industry said Oracle Corp.'s Larry Ellison holds the current record with his 452-foot behemoth Rising Sun, and that someone will surely build a bigger one.

"But there won't be very many of those," Ms. Pearson said. "There's not many places where you can take them and use them. You can't go any place except commercial ports."

I think John's Schmiemann's statement was taken out of context in that re-print, although I understand what the comment was based on... the speed advantage (or capability) of the Millennium 140. At the speeds this yacht can attain... they can reach many destinations inside of a day, whereas another vessel travelling at typical cruise speeds... would be an overnight or multiple day trip. Time is a precious commodity for some people. I'm sure we can all relate to this.

I hope you get the chance to manage a yacht one day Jaye. At the current rate of production, there will certainly be more jobs available. According to the Global Build Report, there were 662 yachts under construction, measuring 80 feet or larger in July 2004. This is a 12% increase from the same time period in 2003, in which 587 yachts were under construction.

This same report states the total number of shipyards decreased from 142 to 132, indicating the larger, stronger shipyards are growing and possibly... taking business away from smaller custom builders.

You've got that right! And it's a very good question. Slip-space is already at a premium in the more populated areas. Waterfront home prices have risen dramatically. In Ft. Lauderdale, people are securing million dollar "shacks"... just for the dock.

Eventually, the less populated areas of coastal regions will begin developing. Unfortunately, land prices along the water (anywhere!) are at a premium and it might be financially impossible to justify marina development.

Recently, more people have begun buying property in the outer islands of the Bahamas. It's still relatively cheap, but going up fast. There are also a number of marinas under development. The Bahamas (and Caribbean) have always been a destination, but the islands may become more of a home port for many yachts.

One trend I've noticed more of lately... docks are being turned into "condos" sort-a-speak. They are being called "Dockominiums". (no joke)

Never thought I would see the day... when we buy the water the boat floats in.

Just received a press release relating to this subject...

One of the most expensive parking spaces in the United States is in 12 feet of water near downtown Fort Lauderdale.

By paying more than $200,000 a year, yachts of up to about 140 feet can dock at one of the six protected slips at The Boathouse on the Seminole River, near the entrance to Port Everglades.

An unusual structure even for South Florida's high-end marinas and boatyards, The Boathouse is a three-story, reinforced concrete building designed to withstand winds up to 160 miles per hour.

It has six interior slips covered on three sides and two outside slips, which go for only about $100,000 per year. It also offers air-conditioned storage space for each tenant, a three-car garage, 24-hour surveillance and other amenities.

"These slips are aimed at the megayacht market, for owners who want to keep their boats in pristine condition," said Kelly Drum, a real estate agent and one of the five South Florida businessmen who bought the structure last year from the original builder/owner for more than $10 million. "These boats are expensive and owners can keep them from getting beat up by the sun, the wind and the rain."

Most megayachts, or luxury vessels 80 feet or longer, tie up at open marinas, waterfront homes or use shed-type dockage that isn't as sturdily built as The Boathouse.

"The primary advantage for us is the undercover storage we have here," said Tony Valentino, captain of an 80-foot Trinity yacht that has been at The Boathouse on a permanent basis for more than 18 months. "We're covered on three sides and it makes it a lot easier to get cleaning and repair work done. Weather can play havoc on getting outside work done on the boat. Now we can make a schedule and stick to it."

The facility is one more selling point in attracting more megayachts to the tri-county area, said Frank Herhold, executive director of the Marine Industries Association of South Florida, a trade group that includes about 800 companies. "Owners save a lot of money by protecting their boats from the elements," he said. "A paint job for a big boat can cost between $350,000 and $400,000."

Drum says that The Boathouse already has lined up leases for three spaces, and sold another. The plan is to keep the outside slips open for transients visiting the area. Transients can also rent interior slip space short term when it is available, Drum said. Eventually, the inside slips will be put on sale for about $3.5 million each.

The county "certainly could use more" facilities like this concrete structure, Herhold said. But building more structures like The Boathouse and other new facilities to protect big boats will be difficult. Waterfront space is in short supply because developers have taken over marinas and repair yards to build luxury condos. "It's a very simple equation," he added. If megayachts can't find space in South Florida, they're forced to go to competing ports like Savannah, Ga., Charleston, S.C., and Jacksonville and in the Bahamas and the Caribbean.

Megayachts visiting the tri-county area have a large economic impact. Big boats use dock space at marinas, carry out maintenance, repairs and refits at boatyards, purchase equipment and services and generate charter and sales commissions. Moreover, owners, guests and crews spend money at local restaurants and malls.

Drum, a partner in Fort Lauderdale-based Drum Realty, which specializes in marine-related real estate, agrees that more high-end boathouses like his would be good for the marine business in South Florida. But, he said, "There is very little space available and it's too expensive to build anything like this." To buy the land and build a similar structure in a similar location today would cost $19 million or more, he estimated.

"If someone went out today and got a piece of property like this, the cost and location would justify vertical development, building a condo. It would be hard to justify building something like this again."

And yet another related story...

Marina makeover to draw boats to Palm Beach.

Wayne Huizenga's plans call for Rybovich Marina to offer more in-water slips for larger yachts, restaurant, shops, residences; town docks expect business overflow.

Some Palm Beach yacht and boat owners say they can't wait until Wayne Huizenga retools and expands the Rybovich Spencer marina and boatyard on North Flagler Drive in West Palm Beach.

And because of pressing slip demand, the $100 million mixed-use waterfront destination will drive overflow business toward the Town Docks, said Palm Beach Dockmaster John Luscomb.

The Miami Dolphins owner and his son, Wayne Jr., president of Huizenga Holdings, have created a new master plan for the 18-acre Rybovich Spencer property they bought last year. The highlights are to rebuild the marina with more in-water slips to accommodate larger yachts; relocate and modernize the boatyard for production of custom Rybovich sportfishing yachts; reconfigure the service and refit yard; add a two-story restaurant overlooking Palm Beach, plus retail shops and a pedestrian promenade along the water; and build two residential towers with 220 units and 22 ground-floor lofts, and a 300-space parking garage.

"I'm very excited. We're hoping to make it our home base, to put our boat there when it's completed," said Palm Beacher Susan Keenan, a director of Lydian Bank & Trust Co. She and her husband, Jim, recently took delivery of a 124-foot Broward motoryacht. "I'm just putting the pillows around now, getting it ready to use. We travel in the summer, but we'll basically keep it here year round."

With the megayacht industry booming and slip space "full" in Fort Lauderdale, "The megayacht push into Palm Beach was expected," Luscomb said. "I've been waiting for this move. And it will help our marina, for sure, drawing more boats here. Fort Lauderdale megayacht production is up 25 percent, and those boats don't go away."

Until two years ago, after an expansion of the Australian Dock, the town did not advertise its facilities, which include 40 slips for yachts more than 100 feet — more than Old Port Cove in North Palm Beach has or Rybovich currently has.

"The biggest issue out there is not enough slips for the megayachts over 100 feet," said boat owner Garrison duPont Lickle, regional president of Lehman Brothers Trust Co. in Palm Beach. "There's very little space and now, huge demand. Rybovich is another high-end marina that is developing larger capabilities and housing, such as apartments for owners and crew." Several already exist in Miami and Fort Lauderdale.

Rates depend of Huizenga...

The Rybovich Spencer makeover will boost dockage rates faster than Luscomb expected, he said — "It depends on how fast Huizenga gets it going. What you'll see first probably is a little bit of [revenue] erosion, because of the competition. If it brings big boats in, Rybovich will fill up first."

That is partly because of the sandbar in the Intracoastal Waterway in the area east of Palm Beach Lakes Boulevard, where the water depth is 8 feet at low tide, Luscomb said. "The deepwater people still go to Rybovich because of that." He cited the loss of some business lately from the 120-foot Parlay sailing yacht, which normally docks at the Sailfish Club, and the owners of larger vessels "who wanted to come here but were afraid to."

Dock rates in Fort Lauderdale are roughly $55,000 annually for a 100-foot slip, while the town charges $30,000, Luscomb said.

"Now they're higher priced than we are, and that won't change. The way Huizenga thinks, he'll price it like Lauderdale," Luscomb said.

"Welcoming public access"...

The redesign will take the Northwood property to a higher level on all fronts, said Jim Bronstien, president of Rybovich Spencer, which has a 55-year history and is known for building "the Rolls-Royce" of sportfishing boats.

Palm Beach County's signature is its "spectacular waterfront real estate, yet most of it is inaccessible for public use," said Wayne Huizenga Jr.

"Bringing in the Huizenga organization allows us to realize the vision we've had for many years, creating a win-win-win for the marine industry, the neighborhoods that surround us and for the community at large who will now have spectacular, welcoming public access to the waterfront," Bronstien said. There are no zoning changes involved, so he anticipates a prompt review by the city.

Pending permitting by the state Department of Environmental Protection and the U.S. Army Corps of Engineers, the marina renovations will begin this summer. The boatyard will be moved this summer, and the southern part of the site will be cleared at the end of the year, Bronstien said.

The project is "pretty far along" in the federal and state permit process, he said. "We've put a lot of time into designing it, of figuring in advance what should work and what ought to work," he said.

Last year, Rybovich Spencer named Jeff Benkelman to head the boat building division, which Bronstien called the first step forward in a new generation of construction techniques.

"We're not a big production builder. We'll keep our heritage of building a few custom boats a year" in a new, state-of-the-art environment, he said.

Palm Beachers are already inquiring about boat slips and the residential units, asking "when can we buy one? We've heard nothing but great things, because people on the island will have a beautiful view looking back," Bronstien said.

Not a "dockaminium"...

The Huizenga influence is the latest in a long line of growth and change at Rybovich Spencer, which is among the largest full-service marine operations in South Florida. In 1949, Rybovich Boat Works and Spencer Boat Co. were competing neighbors in the 4000 block of North Flagler Drive. About 25 years ago, the Bronstien family bought Spencer, and that operation merged with Rybovich in 1991.

The new project will not be a "dockaminium," Bronstien said. It will remain a lease facility, with first-come-first-serve availability for yachts up to 250 feet. Huizenga and Rybovich will develop, build and operate all aspects of the marina/retail complex. The companies are in early discussions with WCI Communities, the developer of One Watermark Place, about the residential buildings.

"There had been some worry that Wayne might go all real estate, or move the boat-building somewhere else. So I'm glad to hear the plan is moving in [a mixed-use] direction," said yacht owner and philanthropist Alex Dreyfoos Jr. "They continue building lotsa yachts, and they're not building too many marinas anymore. Anything along that line has to be helpful."

The new site will offer the public a lot of amenities, Luscomb said, compared to the Town Docks, "where we are limited on what we can put in because of the [public] park. Huizenga has a clean slate, and he's the guy to do it. He does what he says he'll do."

That would include Huizenga's 2003 renovation and upgrade of the Bahia Mar Marina, home of the Fort Lauderdale International Boat Show.

However, Luscomb predicts the Town Docks will hold their appeal for many of its regulars, including Bob Simmons, who has docked his 93-foot HMS Rapture there for three years.

"I lease the slip year round, but when I take the boat on a cruise, they rent the slip, and that's revenue for the town," said Simmons, founder and former president of Sinclair Broadcast Group in Baltimore.

"Some people may not want to be at a big busy spot. Here, it's quiet, and it's Palm Beach," Luscomb said.

I don't know why all this information popped-up just after we began disussing the subject, but here's another story...

Investors are looking for new ways to make dock space available in South Florida for thousands of local boaters and visitors who have seen marinas torn down and replaced by luxury condo developments.

A Jupiter-based company, Seven Kings Holdings Inc., is investing $25 million to build a marina in Riviera Beach.

Greyhawk Marine Group of Dallas is projecting outlays of about $8 million to convert an old Fort Lauderdale boatyard into a modern marina capable of housing yachts up to 120 feet and to add a clubhouse, pool and space for marine businesses.

And Old Port Cove Holdings Inc. of North Palm Beach is completing a dry-storage facility costing $3.5 million to house 350 boats up to 40 feet.

These and other companies are investing to keep South Florida's recreational marine sector, which generates more than 100,000 direct and indirect jobs, profitable by maintaining or expanding space available for boats. Marina operators are struggling to meet demand for new docking and storage space and to maximize the value of their marine businesses, many of which have been gobbled up by residential developments. Over the last two years, for example, more than 300 slips in Broward County alone were closed to the public.

"Our working waterfront is under tremendous development pressure, and space -- especially for dry stack storage -- is critical," said Frank Herhold, executive director of the Marine Industries Association of South Florida, a Fort Lauderdale-based trade group with about 800 members. "If we can't keep up with demand, the area will become like New York City, where people don't buy cars because of a lack of garage space. People will stop buying boats because they won't have anyplace to keep them."

Moreover, competition for megayachts -- or luxury vessels measuring 80 feet or more -- is being exacerbated by an acute shortage of dock space, Herhold noted. These big boats, which come to the area from all over the world for maintenance, refits, repairs and charters, generate hundreds of million of dollars for South Florida each year. If they can't find space here, he warned, they will sail to other ports.

Adding new slips

One way to meet the demand for space would be building new marinas. But this is not usually an option because of the high cost of waterfront property. Moreover, it takes years to obtain zoning, construction and environmental permits from different government agencies to develop a marina.

Two businessmen based in Jupiter are challenging this trend by investing to maintain or increase dock space at several South Florida marinas.

JC Solomon II and Raymond Graziotto, the owners of Seven Kings Holdings, took over a defunct marina in Riviera Beach and are building Loggerhead Club and Marina-Riviera Beach on 10 acres at a cost of $25 million. By purchasing property that was already zoned for marine use, they avoided the long waits required for building any new marina.

The two partners, successful real estate developers, are constructing a dry-storage facility that will be able to handle more than 300 boats up to 45 feet, waterfront slips to accommodate about 30 boats, a private club, a fueling station, a ship's store and other marine businesses.

Loggerhead will have an enclosed building for dry storage where boats will be lifted into racks by forklifts. This system allows more boats to be stored in a limited space than if they were tied up at docks.

The company owns or manages eight marinas from Vero Beach to Miami and recently refurbished Frenchman's Marina in Palm Beach Gardens, converting it into Loggerhead Club and Marina-Palm Beach Gardens with 130 slips. It plans to extend the Loggerhead brand to other properties.

The Seven Kings partners got into the marina business by chance, buying land at the start of the 1990s in Palm Beach Gardens that had a marina, said Graziotto, the company's president and chief operating officer. "We decided to apply good management principles and make it more than a mom-and-pop business." They also saw an opportunity in taking over other marinas and upgrading them.

Going upscale...

While Seven Kings is adding space in Riviera Beach, other projects aim at upgrading marinas and boatyards to add value.

One investor, for example, is taking over a do-it-yourself repair boatyard in Fort Lauderdale and converting it into an upscale marina and club for megayachts.

Greyhawk in January took over Summerfield Boat Works, built in 1940, and plans to build a new seawall, 28 or 29 covered wet slips for megayachts, a clubhouse for captains and crew and other amenities. The old Summerfield yard will be renamed the Pier 17 Marina and Yacht Club.

"We want to make it very clear that we are not building condos," said Brad Tate, regional director for Flagship Marinas, the company that will manage the facility for Greyhawk. Tate was responding to public concern that the project would be replacing yet another marine facility with apartments.

But the project has its downside for some boaters. The new investors seek to maximize the value of the Summerfield property by attracting the big-spending megayacht crowd. The boaters who currently use the popular yard, though, will have to find another place to carry out repairs and maintenance in a market that's already short on space.

The yard, with about 24 employees, will continue to function as the renovation progresses, said Michelle Corson, a partner at Greyhawk. Construction is expected to begin this summer.

In West Palm Beach, the family of South Florida entrepreneur H. Wayne Huizenga plans to invest $12 million to upgrade the marina at the Rybovich Spencer boatyard as part of a larger development project. The family, which owns and operates other marinas, recently unveiled a $100 million project that includes converting the marina into a modern facility for megayachts, building more than 220 residential units, a waterfront restaurant and space for retail outlets.

A town steps in...

The space shortage has even prompted one local government to develop a public marina specifically to meet the needs of small to midsized boats.

Lake Park is completing an $8 million investment to rebuild an old marina and provide 102 deepwater slips for boats ranging from 30 feet to more than 60 feet at Lake Park Harbor Marina. The town dredged the marina basin, built new docks, erected a seawall and replaced a crumbling and poorly maintained facility, said Patience Cohn, the marina manager. "The old facility had 200 slips for 20-foot boats, but some were unusable and the basin had silted up over the years. It was very much in disrepair," she said.

When the town decided to move ahead with the facility, it found that some marinas were not catering to owners of boats between 30 feet and 60 feet, Cohn said. People with small boats on trailers can use public ramps, and owners of larger craft will be able to lease space at the new marina. "This is a bread-and-butter market," Cohn said. "The town aimed to keep boating alive in Palm Beach County."

Despite new investments, some in the industry see marina owners and operators swimming against the economic tide.

"The trend to develop waterfront property [for other uses] is likely to continue," said Rick Morgan, president and chief operating officer of Old Port Cove Holdings in North Palm Beach. "Waterfront property is a strong demand commodity and folks in business are going to find the highest value and best use for these facilities. And in a lot of cases, it's not a marina."

I can't believe this, yet another related story surfaced...

Lake Park's New Marina Ready For Vessels
By Bill DiPaolo at the Palm Beach Post
(Palm Beach Post Staff Writer)

Wednesday, March 02, 2005

LAKE PARK — As boaters begin to dock their vessels this week in Lake Park's new marina, town officials and business people say the 103-slip facility will revive the town's waterfront.

Lots of public access — for both boaters and the public — is the goal of the new marina between Silver Beach Road and Cypress Drive. The remainder of the $8 million project — fuel and pump stations, parking, landscaping and finishing the marina store — will be complete in the next few months.

Jim Story of Riviera Beach takes his dog, Max, for a stroll along the new Lake Park Marina. The town is close to completing the $8 million project in the next few months.

"You gotta give this little town credit for taking on such a huge responsibility," said Patience Cohn, the marina manager. "There was lots of pressure for the town to sell the property to private developers. But the town is meeting the need for public ocean access."

September's hurricanes delayed the scheduled October opening, which itself was rescheduled from April.

Design changes have contributed to the delay. In addition, state and local permits, backed up following the hurricanes, had to be obtained. And, in mid-February a truck hit a nearby powerline and the marina lost electricity for a day.

"It's always something," said Cohn, a Fort Lauderdale resident who has been in the boating business since she was a child on the historic whaling island of Nantucket, Mass.

Still, about 85 percent of the slips at Lake Park Marina are already leased, said Cohn.

Lake Park's original marina, built in the 1960s, was for about 200 smaller boats. With no space for larger boats, the marina often was left half empty. Slips — and boats — were becoming more rundown. Local marine businesses suffered.

Town officials and boaters began to push for a new marina that would not only handle more registration and larger vessels, but have the more up-to-date marine amenities as well. Registration of boats in Palm Beach County is booming, up from 40,109 in 2000 to 42,775 in 2003. Public launching and docking facilities have not kept up, said Lou Daniello Jr., president of the Marine Industries Association of Palm Beach County.

"You go to Phil Foster Park on a weekend, the lines are so long you are lucky to launch your boat," Daniello said. "And many dock owners are selling out to developers of townhouses and condominiums. Expensive waterfront housing is where the money is."

The marina plan has changed significantly since the $8 million project was approved five years ago. The town is paying for the marina with $2.1 million from a $9.8 million bond issue approved by town voters in 1997, borrowing an additional $5 million. The final $1 million came from a grant from the Florida Intracoastal Navigation District.

The marina originally was to be 214 smaller boat slips. But town officials reduced that number to 103 deeper, larger slips, up to 60 feet, to accommodate bigger boats that will pay higher dock rental fees.

"Lake Park Marina is carving themselves a good niche with boats that size," said Daniello.

In the next few months, the following will be completed:

• A two-story building with a ship's store, laundry, restrooms and showers on the first floor. On the second floor will be a 1,000-square foot public meeting room.

• Picnic tables near the public walkway on the north side. The walkway will open for fishing sunrise to sunset.

• Two fuel stations, one for diesel and the other for regular gas for boaters and two sewer pump stations also will open.

• Powerlines between Silver Beach Road and Cypress Drive will be buried and native trees will be planted.

• Parking spaces for 55 boat trailers in the southwest corner of the marina. Six parking spaces will be reserved every day until 10 a.m. for Lake Park residents only.

• Two public access boat docks. A small building will house offices and restrooms for those using the public boat ramps.

"We'll get the place running and see if a restaurant is what we want," Cohn said.