Magazine article Journal of Property Management

Neutral Parking Rates: East Coast Parking Rates Have Little Impact on Companies' Decisions regarding Where to Park Offices

Magazine article Journal of Property Management

Neutral Parking Rates: East Coast Parking Rates Have Little Impact on Companies' Decisions regarding Where to Park Offices

Article excerpt

Gas prices aren't the only carrelated expense shooting upward, parking rates, especially in downtown areas, are on the rise. But just like high gas prices haven't kept most people from driving, inflated parking rates haven't kept companies from locating in areas with premium parking prices for the sake of their employees' pocketbooks.

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Downtown access and all its amenities tend to offset parking rates, which, according to Colliers' North American Parking Rate Survey, have increased over the past 12 months. With the economy on an upswing and new garage developments sparse, those rates are expected to rise again during the next 12-month period.

The survey found parking owners and operators relied on a healthier business climate and rising employment to push rates higher: Most notably, daily rates have increased by 7.1 percent to raise the median rate to $14.04.

The East Coast in particular is experiencing and will continue to experience a hike in parking rates. The highest daily parking rate in the United States was in Midtown Manhattan, N.Y., at $75.85, followed by Downtown, N.Y., at $40.

Midtown Manhattan, N.Y.; Raleigh, N.C.; and Boston were three of the most expensive cities to park in, while parking spots in Washington, D.C., and Hartford, Conn., cost less. Property managers in all cities say business hasn't slowed despite the rate surges.

Pricey parking

Midtown Manhattan ranked as the most expensive parking district in the United States with its unreserved median monthly rate of $492, and it ranked second with its reserved median rate of $576.

Reserved parking guarantees a customer the same space every day. Unreserved parking guarantees a customer a space upon entry. Daily parking permits a customer to park for a full day and not be impacted by "early bird" restrictions. John Tobin, a manager at Colliers ABR in Manhattan, said the impact of those rates in New York is minimal.

Tobin said parking garages have a high turnover: Drivers and their companies aren't loyal to any garage. Companies know employees can be accommodated by mass transportation, and driving and parking are not required. As a result, parking prices hardly impact a company's decision on where to lease office space.

In Raleigh, N.C., however, parking is a necessity, said Beth Ames, an assistant to the property managers at Collier Pinkard.

"People will pay the fee no matter what," she said.

Three months is the average waiting period for 20 percent of the garages in Raleigh. Unreserved and reserved rates run around $72.50 per month and $17.50 per day.

The situation in Boston is very much the same, said Dan Ozelius, senior vice president of Spaulding & Slye, a commercial real estate services firm with an office in Boston. The median unreserved price of $425, the median reserved price of $450 and the median daily rate of $32 don't slow down Ozelius' rentals, he said.

"Boston is a quirky city--it has the ability to attract employers and keep them there," he said. "Parking rates just don't drive that. It's all about getting the tenant in and making them happy and making sure the building is full."

Property managers said since closing the deal is paramount, they may include incentives in the lease like a free month's rent or allowances for build out to offset high parking rates. …

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