The capital allocator's dilemma: where an acre of dirt works hardest in 2026

Two-story garden-style multifamily complex with surface parking and xeriscape landscaping.

RV parks, multifamily apartments, and hotels each promise compelling risk-adjusted returns, but the numbers reveal a surprising hierarchy when measured by the metric that matters most to developers and lenders — productive yield per acre of entitled land. In a capital markets environment where the 10-year Treasury sits near 4.26% and construction costs have plateaued after four years of escalation, the question facing institutional investors is not which asset class generates the highest gross revenue, but which one converts raw acreage into durable, financeable cash flow at the lowest basis. The answer depends on site characteristics, capital structure, and risk tolerance — but the data increasingly favors an asset class that most institutional allocators still overlook.

A single acre tells three very different stories

The revenue-per-acre comparison between these three asset classes exposes a fundamental tension between intensity and efficiency. A garden-style multifamily development at 20 units per acre generates roughly $390,000–$490,000 in effective gross income annually, assuming national average rents of $1,735–$2,184 per month and stabilized occupancy near 94.5%. Push density to a podium-wrapped mid-rise at 90–115 units per acre, and EGI climbs to $1.2–$2.4 million. High-rise towers in gateway markets can exceed $5 million per acre — but at development costs north of $350,000 per unit, the yield-on-cost math often fails to justify the basis.

Hotels produce the highest gross revenue per acre of the three. A 100-key select-service property on 1.5 acres, generating roughly $36,500 in rooms revenue per key annually at the national RevPAR of $99.94, throws off approximately $2.4 million per acre in topline revenue. Full-service hotels with food-and-beverage programs on three acres can reach $4.7–$6.0 million per acre. But operating expense ratios of 55–65% for full-service properties compress those topline figures dramatically. GOP margins have been eroding since 2023 — labor costs are up 22% from 2019 while occupancy remains stuck at 63%, still 280 basis points below the pre-pandemic benchmark of 65.8%.

RV parks sit at the opposite end of the intensity spectrum. At a practical density of 10–12 full-hookup sites per acre, with average nightly rates of $55–$90 and annual occupancy of 60–70%, a well-operated park generates $80,000–$180,000 in gross revenue per acre — a fraction of what hotels or dense multifamily produce. Yet the story changes when you examine the denominator: what it costs to create that revenue stream.

Development costs reveal where the real alpha hides

The all-in development cost to create one acre of productive real estate diverges wildly across these three asset classes, and this divergence is where capital allocation decisions should begin. Developing one acre of select-service hotel rooms costs approximately $14.9 million — 100 keys at a median $223,000 per key per the 2025 HVS Development Cost Survey. Full-service hotels run $27.3 million per acre. Even limited-service prototypes, once the darlings of highway-exit development, now cost $167,000 per key, pushing per-acre development costs above $12 million. Construction cost inflation has moderated to 3.3–3.6% annually, but tariff uncertainty continues to pressure FF&E procurement and steel pricing.

Garden-style multifamily development costs $150,000–$225,000 per unit all-in, translating to roughly $3.0–$5.6 million per acre at typical suburban densities. Mid-rise podium projects range from $225,000–$350,000 per unit, with per-acre costs of $10–$25 million depending on structured parking requirements — each space adding $25,000–$75,000 to the basis. Construction timelines compound the cost: garden-style projects average 24 months to completion, mid-rise projects 28 months, and high-rise towers nearly 35 months according to Yardi Matrix data.

The RV park cost basis is where the arithmetic becomes compelling. At $30,000–$40,000 per site for a quality full-hookup destination park — including utility infrastructure, concrete pads, roads, and amenity allocations — one acre of developed RV park costs $300,000–$480,000, roughly one-tenth the cost of garden-style apartments and one-fortieth the cost of a select-service hotel on a per-acre basis. Even premium resort-class developments with pools, clubhouses, and glamping units rarely exceed $600,000 per developed acre. The yield-on-cost implications are significant: a park generating $120,000 per acre against a $400,000 basis achieves a 30% unlevered yield — a number that neither multifamily nor hospitality can approach.

Lenders see three different risk profiles

Capital markets access defines the practical ceiling on returns, and here the three asset classes occupy distinctly different positions. Multifamily enjoys the deepest, most liquid financing market in commercial real estate. Fannie Mae and Freddie Mac provide non-recourse debt at up to 80% LTV with DSCR floors of just 1.20–1.25x, at rates in the low-5% range as of late 2025. The FHFA raised GSE volume caps to $88 billion each for 2026 — a 20% increase signaling continued government support. Agency lending alone accounts for over 40% of all multifamily originations, and the MBA projects total multifamily lending volume of $400 billion in 2026. CBRE's 2025 Global Investor Intentions Survey found 72% of investors preferred multifamily, far exceeding any other property type.

Hotel financing has improved materially since the pandemic trough but remains structurally more expensive. CMBS issuance for hotels jumped 110% in early 2025 according to Trepp, though rates of 5.88–7.49% and DSCR requirements of 1.40–1.50x reflect the operational volatility lenders continue to price in. Construction financing for hotels has become particularly punitive — SOFR plus 650–750 basis points — effectively freezing new supply in most markets. Hotel cap rates range from 6.2% for Class A metro luxury to 10.5% for economy properties, with the CBRE H2 2025 Cap Rate Survey showing nearly half of hotel respondents believe rates have peaked.

RV parks occupy a financing niche that is simultaneously the sector's greatest constraint and its most underappreciated advantage. The SBA 7(a) program allows up to 90% LTV on RV park acquisitions with 25-year fully amortizing terms — no balloon risk — at rates averaging 9.47% in 2025 across 64 funded transactions totaling $90.4 million. The SBA 504 program offers fixed rates at 6.55–6.93% with 80–85% leverage. Conventional bank lending for RV parks typically caps at 60–70% LTV, but for an operator willing to navigate the SBA process, the leverage profile actually exceeds what most hotel developers can access. The constraint is scale: the average SBA loan for an RV park is just $1.4 million, and only 39 lenders actively participate in the space.

Site selection reshapes the competitive equation

The three asset classes respond very differently to site characteristics, and this is where feasibility analysis becomes most consequential. Hotels and mid-rise multifamily pencil best on compact infill sites near demand generators — airports, convention centers, employment nodes — where land costs of $2–$10 million per acre are offset by premium pricing power. A 100-key select-service hotel requires just 1.0–1.5 acres with surface parking; structured parking can push density above 200 keys per acre in urban locations.

Garden-style multifamily performs optimally on 10–25 acre suburban parcels where land costs fall below $500,000 per acre and surface parking eliminates the $25,000–$75,000 per-space structured parking penalty. At 20 units per acre, a 15-acre site yields 300 units — sufficient scale for institutional management and agency financing. Entitlement risk is moderate: multifamily zoning is well-established in most jurisdictions, though NIMBYism and impact fee escalation can add 12–18 months and $5,000–$15,000 per unit in soft costs.

RV parks require the largest land assemblage but face the lowest per-acre improvement burden. The median park sits on 23 acres per ARVC benchmarking data, and optimal economics favor 15–25 acre sites with 150–250 sites. Zoning is the primary entitlement risk — many jurisdictions lack specific RV park zoning categories, forcing developers into conditional-use or special-exception processes. But on rural and exurban parcels where land costs $5,000–$20,000 per acre, the total basis for an entitled, developed RV park remains a fraction of comparable multifamily or hospitality projects. Infrastructure requirements are straightforward: water, sewer, and electrical hookups at $6,000–$14,000 per site, gravel or asphalt roads, and a bathhouse. No elevators. No structured parking. No sprinklered corridors.

Supply dynamics favor outdoor hospitality through 2027

The macro supply picture creates asymmetric tailwinds for RV parks. Multifamily deliveries peaked at a near-record 685,000 units in 2024 and remain elevated at 536,000–585,000 units in 2025 before declining to approximately 422,000 units in 2026. Sun Belt markets — Austin, Raleigh, Nashville, San Antonio — face vacancy rates of 8.7–10.4%, with asking rents declining 6–8% year-over-year in the most oversupplied metros. Construction starts have plunged 74% from their 2021 peak, suggesting a supply trough in 2027–2028, but the near-term absorption challenge is real.

Hotel supply growth is running at just 1.3–1.4% annually, well below the pre-pandemic average of 2%, with new openings constrained by prohibitive construction financing. Yet RevPAR growth has stalled — STR's October 2025 revision projects a -0.4% decline for full-year 2025 — and ADR increases of 0.8% are running below inflation for the third consecutive year.

RV park supply remains fundamentally constrained. Roughly 90 new campgrounds with 18,000 sites are in various planning stages through 2027, according to RVBusiness, against an installed base of over 1.1 million sites at 12,000-plus private parks. That represents supply growth well below 2% — and meaningful new development faces zoning barriers, extended permitting timelines, and infrastructure costs that have risen substantially since 2021. Meanwhile, 56% of campers reported difficulty finding available sites in 2024 per KOA's annual survey, and private campgrounds captured a record 31% share of all nights camped.

What the data means for capital allocation decisions

The institutional investor evaluating these three asset classes in 2026 faces a clear risk-return spectrum. Multifamily offers the lowest risk, deepest liquidity, and most favorable financing terms — but cap rates of 4.7–5.7% and yield-on-cost targets of 6.0–7.5% deliver modest current returns in a 4.25% Treasury environment. Hotels generate the highest gross revenue per acre but demand the most capital, carry the greatest operating complexity, and face margin compression that shows no sign of reversing. RV parks offer the highest unlevered yield-on-cost, the lowest capital intensity per acre, and favorable supply-demand dynamics — but in a financing market that limits institutional scale.

The smart money is watching where these lines converge. Sun Communities' $5.65 billion sale of Safe Harbor Marinas to Blackstone in 2025 — a transaction that refocused a $16.2 billion REIT exclusively on manufactured housing and RV communities — signals that institutional capital increasingly views outdoor hospitality as a core allocation rather than an alternative strategy. As the sector matures, cap rate compression from the current 8–10% range toward the 6–7% levels seen on institutional-quality parks represents the kind of basis-point arbitrage that built fortunes in multifamily during the 2010s.

For developers and lenders evaluating specific sites, the feasibility question ultimately reduces to three variables: acreage available, capital basis per acre, and stabilized NOI per acre. On those metrics, the data points toward an uncomfortable conclusion for conventional CRE allocators — the asset class with the lowest barriers to understanding may offer the highest barriers to competition, and vice versa.

Sources:

• HVS U.S. Hotel Development Cost Survey 2025

• CBRE U.S. Cap Rate Survey H2 2025

• CBRE U.S. Real Estate Market Outlook 2025 — Multifamily

• Freddie Mac 2025 Multifamily Outlook

• Yardi Matrix Multifamily Supply & Starts Data 2025

• STR U.S. Hotel Performance Benchmarking 2025

• Lodging Econometrics Q4 2025

• Pipeline Report Marcus & Millichap Investor Insights, October 2025

• ARVC Outdoor Hospitality Benchmarking Report 2023

• KOA North American Camping & Outdoor Hospitality Report 2024

• Innowave data (proprietary industry aggregate)

• SBA 7(a) Loan Program Activity Report 2025

• Fannie Mae Multifamily Lending Guidelines 2025–2026

• FHFA Scorecard and GSE Volume Cap Announcement 2026

• Trepp CMBS Issuance Data 2025

• Deloitte 2026 Commercial Real Estate Outlook

• RVBusiness Campground Development Pipeline Report 2024–2025