No one looks forward to parking. Discovering parking that is affordable, available, and close to the destination can make people consider just staying home. No one looks forward to managing a parking lot either. Commercial building operators typically don’t even want to manage parking themselves and typically outsource the operation entirely.
Ironically, parking is generally viewed by commercial tenants as one of the most important attributes in considering office locations. But despite its significance to the tenant experience, it is consistently the lowest rated amenity delivered by properties. Expensive renovations to commercial buildings occur frequently to “upgrade” the tenant experience, yet they rarely include improving parking.
As a result of the pandemic, most commercial tenants worked from home which reduced daily parking revenue and made parking more available. The surprising result? The inefficiencies of the current parking business model were exposed, and property owners are paying the price.
Want more irony? Building occupancy remains well below pre-COVID levels, yet parking occupancy is up. This is due to the perception of the workers coming to the office that driving private cars is safer than mass transit. But so many parking operators were decimated during the peak of the pandemic, they have yet to rebound. “I’m not sure if there’s a parking owner in the country that has recovered fully and many are still far down, way down, from where they were pre-COVID,” said Eric Haggett, a financial specialist at Walker Consultants, a Chicago-based parking firm.
With so much to manage within the building walls, property teams have historically put parking on the back burner, categorized as “good enough” or “maybe later” regarding improvements. These third party-managed parking structures become a line item on a financial statement instead of the complex asset that they are.
Parking is big business. It annually generates over $20 billion in revenue and the United States hosts more than 105 million parking spaces, according to the International Parking Institute. Dedicated parking companies hold the largest market share and offer third-party management of privately-owned garages and lots, such as those serving thousands of commercial buildings across the nation.
Parking is a rather archaic operation, especially when compared to other features and amenities of modern real estate. “Parking as an industry has been slow to adopt technology,” explained Coley Nash, Parking Director at Kastle Systems, the nation’s largest cloud-based access control technology and managed services company. He continues, “Case in point, automated parking access and revenue control systems have been available for decades, yet in any major city, you still find the pervasive presence of cashier booths making manual transactions.”
Nash adds, “For tenants, the garage experience is separate from the building, requiring extra credentials to present through a gauntlet of separate access control systems and databases for the operations teams. It’s beyond time for parking to be brought into the 21st century for the benefit of both owner, operator and client.”
Given its importance to the tenant experience, it seems that connecting parking management to the building ecosystem should be a priority. Fortunately, property technology providers, like Kastle, are launching new solutions that can extend building access control and data management into the fray of modernizing parking operations beyond simple old-school card readers and gate lifts.
Property owners have long known that they can lose some revenue potential by outsourcing their parking management. It’s the classic story of weighing available time and resources versus paying a third party to run things. New PropTech can help address this dilemma. As building systems become more connected, from access control and accounting to building operations and comfort, using technology to integrate the parking function can simplify and streamline the operation making it easier to manage from a single hub.
“There is no standardization in parking. Buildings end up with three different databases: building access data, parking access data, and parking billing information used by the parking management company,” said Nash. “This redundancy requires heavy admin and labor to manage.” It also hides inefficiencies and lost revenue.
Just how much impact can technology that connects parking and buildings make? It can boost parking revenue by five to fifteen percent and reduce operating costs by ten to thirty percent, according to data from KastlePark, a new user-identity-based parking management platform by Kastle Systems. Says Nash, “With KastlePark, we are extending the operational efficiency and tenant-level data management capabilities of building access control to the parking function, where user access rights, for building and parking, are centrally controlled and billed by a single administrator: the property manager.”
Leaning on technology to connect systems can eliminate billing errors, reduce management costs, and provide greater visibility for managers to assess parking activity by tenant, just as they do office occupancy and lease payments. “Maintaining a single database that ties parking access to billing provides a clean way to collect revenue the building is due based on lease terms and contract parking rates. Every parker with garage access is invoiced, either individually or to their tenant employer, providing clarity in collecting contract parking revenue,” said Nash.
Integrating parking and building access data can reduce standard revenue loss due to outdated parking access privileges, attendant errors, or the person who lost their credential and politely asks, “can you let me in today?” It creates clarity between those who is granted parking based on existing contracts and those who are not (and must pay as they go). Tracking garage users’ identities can reveal scheduling opportunities to sell flexible permit types and open unused parking to non-tenant drivers in surrounding buildings.
A key motivation for connecting parking data and building management systems is the tenant experience. Consolidating data silos enables seamless movement for tenants from “street to suite,” as Nash put it, and eliminates the need for multiple credentials to get in and around the building. This means access data can now confirm not only when an individual entered the garage, but which tenant they represent, if their parking is covered in the tenant’s lease, or if the fee needs to be billed to the tenant.
Office buildings are typically the highest generators of parking revenue because they have the most contract parkers. About 90 percent of parking revenue comes in through tenant contracts. “I don’t think we’ll see the office the way it was before COVID. Offices are seeing people come in three days a week but they’re driving those three days and garages only know them as mystery parkers. They’re just showing up and pulling a ticket,” explained Nash.
Looking at this data and noticing spikes and lulls can be used to help tenants understand the effects of their flexible work schedules. Landlords can approach tenants with this data to help them create more appropriate parking contracts. These could include offering discounts for parking three times a week or ten days a month or another place along the spectrum.
For new office goers and visitors, integrating parking with building access control or visitor management systems creates a better, more streamlined experience. Using the same mobile access credentials or key fobs as they do for building access office movement, tenant occupants can instantly enjoy parking access using the same familiar device.
Parking should be seen as an amenity, not a burden. Traditional building operations, fragmented systems, and multiple credentials isn’t efficient or reliable for parkers and is expensive for building owners. The vision of “the office of the future” will continue to evolve, but regardless, parking needs to be an integral part of the conversation.