According to a recent study done in Vancouver for over 70 condo and rental apartments, the parking was 62% empty for condos, 59% for mixed-use buildings, and 75% empty for rental apartments after 11 pm on weekdays. Another insight is that rental units less than 600 square feet have the lowest parking occupancy. The parking occupancy is further lowered if the spot is closer to public transit stations. For instance, condos near transit stations have between 0.86 to 0.97 vehicles per unit vs 1.09 vehicles per unit for building further away from the transit stations. The difference in vehicle ownership per unit is further increased for rental apartment buildings where parking utilization falls between 0.35 to 0.72 vehicles per unit as compared to the 0.99 vehicles per unit for buildings further from the transit stations. Other cities such as Chicago, rental apartments on average oversupply parking by 0.27 spaces per unit.
Based on the vehicle ownership per unit data, there is a positive correlation between parking utilization and distance from the building to a transit station, the correlation is further amplified when the building is a rental apartment. Overall, rental apartments near transit stations have the highest oversupply of parking spots while condos that are further away from transit stations are likely to have a shortage of parking.
RENTING OUT UNUSED PARKING INCREASES PROPERTY VALUE
If the building is located in areas where parking is in demand and available parking is scarce such as limited on-street parking, one of the best passive income for rental apartments and condo buildings is renting out unused parking spaces. Moreover, the management of these parking lots can make a huge difference in the NOI of the real estate asset. Some developers are starting to retain the ownership of the parking lot, since keeping the parking lot is a lucrative income with low operational costs to, the challenging lies in finding a trustworthy and effective parking lot operator to manage the parking lot.
In locations such as downtown where parking supply is limited, renting out parking to non-tenants at a premium pricing can be a great way to increase the NOI of your real estate.
ESTABLISH PARKING POLICY AND LEASE FOR MONTHLY PARKING
Ensure that not too many spots are leased out to non-tenant, so that good quality tenants rent elsewhere due to lack of tenant parking. A lease agreement for all parking that outlines a 30 days cancellation notice from either party can mitigate a parking shortage when a new tenant requires additional parking while maintaining the occupancy rate of the parking lot.
GENERATE CASH-FLOW FROM TENANTS FOR MONTHLY & OVERNIGHT PARKING
If overnight parking is prohibited for visitor parking, residents with multiple vehicles or guests often violate the overnight policy or else forced to look for parking at a nearby building. To resolve this, the building can rent out overnight parking passes on a daily, weekly, or monthly basis to residents with multiple vehicles or guests. For rental apartments, even if the current residents are not charged for parking, management can start charging for parking spaces the next time a unit becomes vacant.
CHARGE DIFFERENT RATES FOR DIFFERENT PARKING SPOTS
Ensure all parking stalls are numbered accordingly. Charge higher rates for parking spots that are indoor and closer to the elevator than parking spots that are exposed to the elements and further away from the exit. Each tenant can be either assigned a specific spot number or a parking area/zone to reduce dispute between tenants or public drivers parking in reserved parking spots if public parking spots do not have numbered stalls or no clear verbiage outlining the spots are for the public instead of reserved. For a larger lot, residents parking can have a parking gate so that only tenants with access can drive into the reserved section of the parking lot.
ASK FOR CREDIT CARDS ON-FILE
Instead of taking post-dated cheques or cash which are prone to error, theft and can make the job of property manager dangerous. It is best to use online payment processors such as Stripe or Moneris and set up subscription billing for all drivers. Bounced cheques happen more often than you think and they often fall through the cracks. Parking operators that take credit card and has the proper payment processor partner can catch declined credit card in real-time and notify the driver immediately with the proper next steps.
PARKING AN AN AMENITY
Whether the parking is charged or not at the property, it should always be marketed as an amenity instead of the basics. Parking can be a deciding factor for many tenants and promote your real estate with an edge over your competition when advertised properly.
CHOOSE THE RIGHT PARKING OPERATOR
Managing the parking lot takes time and energy away from the on-site property management and building owner's core focus. Nobody likes to get a phone call at 11:30 pm on a Sunday to hear that a resident's parking spot has been taken by someone else and asked to go on-site to either ticket or tow the vehicle. A good operator will reduce the number of parking complaints and handle all the parking requests from both residents and the public while managing the entire operations of the parking lot - advertisement, operations, enforcement, and reporting. Enforcement can become a headache for many owner-operated lots where the parking lot is sometimes managed on a piece of paper. The property manager often has to deal with angry drivers who sometimes threaten the safety of the building staff because their cars were ticketed or towed; However, with a parking operator, all this goes away as the building manager can inform the driver that parking is managed by a third party operator who is responsible for enforcement actions such as towing or issuing both private and city tickets, the later must be paid or else the driver will not be able to renew their sticker or license. Size matters as well when choosing a parking lot operator, many larger parking lot operators don't spend as much time understanding the needs of the specific lots or optimizing the parking operations resulting in lost potential revenue and additional expenses. While smaller parking operators can provide a more personalized parking lot management experience for the property manager and building owner.
Author: Frank Jing, Strategy & Operations at GoParkr
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