When people look at urban office buildings, their natural tendency is to look up. In a lot of ways that makes sense. It’s a pretty amazing feat of engineering to build soaring structures that provide workspace for thousands of people. But when it comes to the bottom line, a major source of revenue takes place below the earth’s surface. That’s where parking comes in, which is an often-overlooked source of income. For the property industry, this is quite literally buried treasure. The bad news is that, because of the COVID-19 pandemic, property owners now find themselves in uncharted territory, as regular monthly parkers stay home, and timelines for their return are uncertain. The good news is that there are creative options to bring in much-needed income during these lean and uncertain times.
Up until the pandemic started property managers had little more to worry about than ensuring that all of their rented parking spots were paid in full each month. Then the coronavirus landed in the U.S., halting the markets, disrupting our routines, and forcing property managers to wrap their heads around a new “working from home” reality. Many American cities became ghost towns as employees stayed away. Not surprisingly, parking revenues dropped significantly. No one is really sure what the rest of 2020 will look like but what we do know is that cities will not be returning to their former selves anytime soon. Even companies that are reopening their offices are enforcing social distancing, meaning that large chunks of their workforces will be working remotely at least part of the time. This has created an uncertain future for urban parking lots.
It is easy to see that things are bad. It is also easy to say that the situation is unfixable. Or is it? In fact, forward thinking property companies are making the best out of a bad situation by radically reimagining the parking side of their businesses and coming up with new revenue streams that would have been unthinkable even a few months ago. This is not a time for incremental improvements and small fixes. Property companies need to go back to the drawing board and come up with different approaches to filling the empty spaces in the absence of the commuters who have reliably filled parking lots for the last 50 years.
The first step to recovery is flexibility. The modus operandi of offering parking to workers simply won’t cut it for at least the next year. The whole idea of one person/one space doesn’t make sense if employees are coming into their offices one week a month, or two days a week. Property owners need to create options, such as space sharing, that allow part-time commuters to share their parking spots. This is surprisingly easy to do but it flies in the face of parking orthodoxy, which frowns on people getting “something for nothing.” That kind of thinking needs to go away—and stay away forever.
Sharing spaces is not the only kind of flexibility that property owners need to consider. Another is attracting fleets to park their vehicles in unused spaces. This has always been done on a small scale of course but now is not the time for small thinking. A perfect example of this is rental car companies. If you think about it, they have more cars than spaces, because a large percentage of their vehicles are usually on the road. However, because people aren’t traveling very much these days, the majority of their cars are sitting idle. That’s a great opportunity for property owners and operators to offer bulk parking for hundreds or thousands of cars at a time.
This isn’t just a theoretical construct. At San Francisco International Airport, all of the available slots are filled with cars from Hertz, Avis, Budget, and the other rental car companies. The airport doesn’t have nearly enough parking for all of the cars that would usually be on the road at any given time. As a result, many rental companies are parking cars by the thousands at Levi’s Stadium, home of the San Francisco 49ers football team. It’s a match made in heaven: No football games are being played right now, but the stadium can recoup some revenues by renting its parking lots. On the other side of the coin, the car companies don’t have to worry about where to leave millions of dollar’s worth of vehicles. It’s truly a win-win for everyone.
Downtown office buildings and residential towers aren’t airports, but the principles are the same. Empty spaces generate no revenue, and any opportunity to rent parking places (even at a bulk discount) contributes. It’s important for property owners and managers to keep an open mind and show flexibility to maximize their returns during these times.
There’s no one way for owners of downtown buildings to bounce back magically from the pandemic, however, by taking a radical approach to reimagining non-traditional sources of revenue, they can at least begin to cover the void. Rethinking the very nature of parking is a good way for them to start.