Cars, Cars Everywhere How to Effectively Manage Parking

Cars, Cars Everywhere

Suffice to say, parking is a big deal in New York City. On any given day, you will find hoards of people swarming the densely populated city streets in hopes of getting a good parking spot—or any spot, for that matter. Tourists circle madly around Manhattan in hopes of finding a spot within a five-mile radius of the bars, art galleries and restaurants they patronize; locals heading home from work prowl their neighborhoods, trying to squeeze into the limited parking spots while others camp out in their front seats for hours to avoid losing their spot for street cleaning.

Not only is parking limited, it’s incredibly expensive to boot. The 277 Park Avenue parking garage wins the prize for the steepest parking rates, charging $29 per hour (plus a $10 surcharge for SUVs). That New York City doled out its first $1 million parking spot in 2012 says a lot about the shortage of parking in the city, as well as what it's worth to some residents to have a dedicated spot they don't have to fight for on a daily basis.

In-House, On-Site Parking

Sure, owning a condo or being a shareholder in a co-op promises residents a place to sleep at night, but as far as their vehicles go, shelter is no guarantee.

“Believe it or not, there are not many parking garages in condos in New York City,” says Hector Chevalier, the senior vice president of SP+, Inc., a national company and the largest provider of parking facilities in the New York/New Jersey area. “Despite the fact that the island is huge and has thousands of buildings, the condominium buildings don’t tend to have garages. The majority of garages are underneath rental buildings and commercial buildings.”

Alfred Nicasio, a senior management executive with Manhattan-based Lawrence Properties, agrees, estimating that only 10 of the 60 plus properties his company manages offers residential parking.

Who’s the Boss?

Regardless of whether the facility is under the building or adjacent to it, there’s more to running a parking garage than just painting some stripes on the pavement and watching the cash roll in. Management, allocation of spaces, facility security and maintenance are just some of the considerations that must be taken into account.

For the few buildings that do have parking garages, the type of services provided and how they are provided to shareholders and unit owners differ. Some associations choose to manage parking facilities personally, while others would rather avoid liability risks and let an outside parking management firm run the garage for them.

“The most practical [option] is for the co-op or condo to lease the garage,” Andrew Grossman, the vice president and counsel for Manhattan-based GGMC Parking, says. “We find that many co-ops do not wish to become involved in monitoring parking operations, and so prefer a straight lease to a management deal.”

According to Nicasio, buildings are hesitant to manage parking firsthand due to the potential liability issues that might arise.

“Based on my experience, most buildings shy away from [self-managing] because it can become a nightmare,” Nicasio says. “The reason for that is because there has to be a level of maintenance that occurs with the building being responsible for the garage. You also have the security that has to go into effect. Some people may think, ‘OK, you’re going to put in a thousand cameras, but now you need a number of employees to oversee that. The maintenance part is also a recurring line item because during the winter months, you have the snow and ice, which can create a hazard. What most buildings prefer to do is just focus on getting a company to oversee it and avoid any potential liability. If the building is responsible for the facility, it’s going to increase the [association’s] insurance costs as well.”

In this case, there are two options available when dealing with parking facilities: A building can hire an outside company to manage the parking facilities, or said company can be hired to manage the facilities.

“You have a management deal, which is a flat management fee. In other words, we get paid a dollar amount every month just to manage a facility,” Chevalier says, explaining the former option. “We have other deals where we have the management fee plus an incentive. We also have what we call reverse management—[the company] provides the owners of the building with an operating budget and you get a set dollar amount for the year. Out of that you pay all the expenses and whatever is left is yours. It’s all about how you manage your expenses. “Then you get the typical lease,” he continues. “You pay the rent and the expenses and you do your job, and whatever is left is yours.”

Access Control

Access to the garage can be through a number of different means. One way is through automated gates and card readers. Visitors can gain parking privileges by entering a code into a call system or by phoning the tenant who can then provide a code required for entry, says John Dorsett, senior vice president of Walker Parking Consultants (the largest parking consultation and parking design firm in the world), which has a New York office. Another method is to issue and require that vehicles display parking permits—these could be decals or hang-tags. But buildings need to always think about costs. Parking permits requires parking enforcement, which is typically more expensive than an automated facility.

“Therefore, an automated access control system is likely the most practical approach for a residential building,” Dorsett says.

Once that’s set up, the building needs to think about who collects the money from the lot users and how that money is turned over to the building. As a condition of possessing a parking facility access card, the card holder is expected to pay a monthly parking lease fee. The parking fee is collected from the building owner or from a commercial parking operator who is working under contract with the building owner.

Mixed-Use Garages

Given the hot commodity that parking spaces represent in the Big Apple, it’s not surprising that more condo and co-op buildings are opting to offer parking facilities, both as an amenity for residents, and as a source of revenue. Making matters more complicated is that many residential buildings are turning their own garages or lots into mixed use garages, says Mary Smith, senior vice president of Walker Parking Consultants.

“We often see in a condo association, when they figure out how much money they could make by selling their spots during the day—that they end up selling some spots to the public,” Smith says.

In mixed use garages, many of the residents will use their condo lots during the evening hours and overnight while they’re sleeping, but not during the day because they’re working—leaving them open to use by the public—which is potentially very lucrative. This arrangement typically works best when the residents are segregated into a different entrance or area entirely of the garage from the public, who pay every time they would enter the garage.

Before transforming the garage into a mixed-use space, it must first be determined if there’s enough room for both the condo residents and the public. “The sustainability regarding parking is changing, Smith says. “There’s huge momentum that we have to make better use of resources. Having a space sit vacant 10 hours a day while the resident is away from the building, and having visitor spaces sit empty most of the time doesn’t make sense.”

So, how much money can a mixed-use parking facility bring into a building annually? It all depends on the size of the garage, Chevalier says.

“It’s hard to determine a number because it all depends on [many factors]. We have buildings where we may pay $1 million or $2 million a year in rent to the building. We have management deals where the building manager can probably benefit from $700,000 to $1 million in revenue from the garage, but there are others where it’s only $100,000 to $200,000. It all depends on the size of the garage and whether it is residential, commercial or condominium,” Chevalier says.

Spot Selection

If a building decides to reserve its garage for residents’ use only, the nitty-gritty must be dealt with: the allocation of parking spaces. Here’s where personal feelings, entitlement and management can all coincide when it comes to parking.

Some communities use a lottery system for prime spots, and other co-ops and condos have parking spots that are appurtenances to the units, which are deeded to the owners, and these spots cannot be split apart from those units.

“What you tend to experience is that shareholders or unit owners are assigned a space and each owner at that point is responsible for a monthly charge. The number I’ve seen is up to $450 a month,” Nicasio says. “They would treat it no differently than a building that has storage space or a building that has bike racks.”

However, just like everything else in New York City, the supply is just too little for the demand. Owning a unit or a piece of share doesn’t guarantee a place to park. Enter: a Hunger Games-style battle of parking spot acquisition, during which residents must battle for a spot—or just wait for someone to move out. Both can be equally painful processes.

On top of that, if a building sold off all its parking, the lack of available spots to accommodate a potential purchaser’s vehicles and guests could very well have a negative impact the purchase decision, Nicasio warns.

Still, there is some self-selection that occurs when it comes to parking, which buildings do take into consideration. When Smith’s son was looking for a rental building, he chose a building that didn’t even offer a parking garage. Since a parking garage is—like a gym, a doorman, a roof top deck or a pool—another amenity that a condo or a co-op could offer, Smith’s son realized that he might be able to spend less on his rental because he wouldn’t require a parking spot. His girlfriend, however, was willing to pay more because she wanted a home for her car as well.

For those who aren’t lucky enough to have the option of parking within their building—and need it—you can always try to buy or rent a space elsewhere. Expect parking companies to come knocking on your door offering deals if your building is within a close proximity to their garage. Nicasio says it’s common for parking firms to reach out to boards and managers in hopes of gaining business. But don’t expect these “deals” to be cheap.

According to Colliers International’s 2013 survey of national parking rates, New York City is home to two of the highest monthly rates. Go figure. A monthly parking spot in Midtown will set you back about $541, while Lower Manhattan comes in a smidge cheaper with an average of $533. If there is ever a time when uncontrollable road rage is completely warranted, it’s now.

Enjolie Esteve is an editorial assistant at The Cooperator. Danielle Braff, a freelance writer, contributed to this article.

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