The privatization of New York city's nearly 90,000 parking spaces has been all over the parking investing news lately. This article tells why it is happening and why parking investments are only going to get better in the future.
Exciting Investment Opportunities Await In...Public Parking
By Harris Kenny & Leonard Gilroy
U.S. policymakers in Chicago, Indianapolis and elsewhere have recently begun to unlock value trapped in a neglected treasure: municipal parking assets. This might not seem like a hot topic, but for investors seeking new places to park capital, creative partnerships to invest in and manage city parking garages, meters and lots are increasingly attractive.
Parking is a historically commercial activity that governments have partially captured. And in many cities the public sector is competing alongside the private sector to provide parking. Therefore, it makes sense that innovative policymakers are seeking to leverage commercially viable assets and shift their role in parking operations to an eager and competitive industry. And institutional investors, pension funds and the like are increasingly interested in investing in public infrastructure assets like parking, lured by a drive for steady returns (typically in the 10-14% range) amid the post-recession flight to quality.
We could not leave this article out of our blog for the obvious reasons. When CNBC called to interview us for an article on parking investing, we dropped everything. Enjoy...
Parking Lots Offer Safe Haven for Real-Estate Investors
Rob Reuteman, CNBC
If you’re scouting the ravaged commercial real estate sector for a safe haven, parking lots may be worth a look.
If you can find one to bid on before it’s snatched up, that is. And if the price isn’t already well out of your range.
“A surface parking lot offers a good rate of return and its rewards are as close to being recession-proof as you’re going to get,” says Ross Moore, chief economist for Boston commercial real estate firm, Colliers International.
“The older ones are nice little cash cows with relatively little maintenance,” adds Moore, who has authored an annual North American Parking Rates Survey for the past ten years.
Says the Alternative Asset Alliance newsletter, “Investors are beginning to realize that a well-located urban parking facility offers stable, long-term revenue growth and that this asset class is becoming an important part of any diversified realestate portfolio.”
The numbers overwhelmingly favor the US parking industry, which grosses some $25–30 billion annually, according to the International Parking Institute.There are nearly a quarter-billion registered U.S. passenger vehicles, which remain parked 96 percent of the time, IPI says.
But two problems loom for the average investor wanting to get into the parking business, says John Roy, co-author of The Ultimate Parking Business Buyer’s Guide.
This report shows the break down of state and local governments that have attempted to privatize their parking assets. It is a great bench mark for the future of parking investments.
Reason Foundation’s Annual Privatization Report 2010 declared that parking assets had become a hot privatization opportunity for local governments. This trend continued in 2011, led by an innovative agreement signed in Indianapolis. Chicago’s previously maligned parking meter privatization deal has been vindicated. Meanwhile major cities such as New York, Pittsburgh, Sacramento, Memphis and Harrisburg are exploring parking asset privatization. And in an unprecedented development, Ohio State University (OSU) began procurement for the first parking asset privatization by a public institution of higher education.
Parking asset privatization has captured the attention of lawmakers, journalists and pundits across the political spectrum. For example, in the April 14, 2011 episode of National Public Radio’s Marketplace program, host Kai Ryssdal effectively summarized the appeal of parking privatization saying,
Paying to park your car on a public street is one of those things that you just kind of have to do. It’ s not like parking meters are going away, and they do keep people from hogging the best spots all day. As an added bonus, parking can be a pretty good moneymaker when cities are short of cash. And there are a whole lot of cities in exactly that situation right now. Cities that are trying to make ends meet by leasing out parking to the private sector.
Parking Investing Blog
The Expired Meter
International Parking Institute
Donald Shoup on Parking
The Valet Spot
We Wrote the Book on Parking Investing