Commercial Real Estate Property Parking in Greater Cleveland
By David Smith
Ride-sharing options are on the rise, and more employees than ever before are working from home or remotely. And yet, in 2018, the competition for landing a parking spot outside an office building is fierce.
The average monthly cost for an office building parking spot ended 2017 at $183, which was up 6.4% on average from the previous year. Increases in parking spot costs were largest in the Southeast (+9.7%), followed by the Northeast (+7.0), West (+6.0%), and finally the Midwest (+2.9%).
Parking spot costs are increasing, specifically, in certain urban central business districts (CBD), as it becomes more difficult to offer as many spaces as needed for the modern office. Office densities have been increasing over the past eight years, which means that the number of people working in a building has been increasing. At the same time, the ratio of parking spots developed per square footage of new office buildings remains largely unchanged. In denser office sub-markets around the United States this has led to a shortage of parking spots. See our interactive map of parking rates across the country.
Several different solutions have cropped up to deal with the growing challenge of parking. Some of the largest occupiers have created their own transit option with buses that move employees in and around the city. Many companies have turned to financial incentives to change commuting patterns among their employees. This may include paying for some or all of the cost associated with existing public transportation. Additionally, occupiers are partnering with shared-ride services to offer employees discounts or even per diems to ease the pain of last-mile commuting. This can open up public transportation as a more viable option for buildings located outside a comfortable walking distance of a transit station.
Municipalities are also investing heavily in alternative transportation, such as bike infrastructure, via the expansion of bike lanes, cycle-friendly streets, and bike share systems to provide another commute alternative. For example, in downtown Chicago there are now protected bike lanes along the Loop that also include bus rapid transit and increased sidewalk space.
Finally, there are also third-party technology providers trying to solve parking and commuting challenges. This includes parking-focused applications that offer assistance in finding and booking parking spots or provide valet services to park your car for you. Most recently, dock-less bicycle and electric scooter systems have grown in popularity in cities around the country.
It has yet to be proven if the financial models for these types of services can be sustainable. As of yet, they have not proven to be as disruptive as other sharing economy applications, such as the leading ride and home sharing companies. Still, there are a growing number of submarkets around the country that are experiencing considerable pain points in the provision of a sufficient supply of parking, so there is plenty of demand for potential technology solutions.
Of course, all of this discussion is happening in the shadow of the coming autonomous vehicle revolution. At some point, none of us may end up parking at our office; we will just hail a driverless car via an app and be dropped off at the door of our place of work. For all the promise of autonomous technology, the world where parking is not needed remains years—likely decades—away. In the meantime, understanding trends in parking spot costs and ratios is a useful tool for occupier planning.
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