DarkRange55
Enlightened
- Oct 15, 2023
- 1,256
One of my best friends, and I have an inside joke that he would always say partly facetiously: I don't understand what the correlation is between the war in Ukraine and the inflation in parking garage prices.
I asked many different, longtime, real estate developers, landlords, managers of parking companies, finance professors, accountants, People that own parking lots and made their fortunes through that, property managers, ect.
I have concisely typed these answers below for your convenience. I'm sure that most people would just say it's capital swine and criminals price gouging, and while there is some truth to that it is slightly more complex. So for anyone who is curious…
Many things aren't correlated with inflation. Or have their own levels of inflation (tuition costs, computers, ect) as CPI is just a basket of goods.
Very circumstantial.
Supply and demand is what drives prices. Parking is expensive when demand exceeds supply. Especially as major cities like Seattle, Austin, Vancouver, Boise, ect continue to grow.
When it is very convenient (like in an apartment building) so that there is no competition.
Some places don't charge on the weekends as they believe free parking brings customers to their tenants businesses.
Some don't own the garage, such as the Hyatt Regency in Vancouver, BC. The hotel leases the parking garage from the company next-door so that even the hotels general manager has to pay for parking.
Some contract with a third-party company this specifically specializes in managing parking garages to to manage their parking. An intern the third-party company seeks to maximize profits.
Businesses charge the market price and if for example Marriott across the street is $2 less for parking, *most* guests of the Hyatt wont park there and walk across the street. They'll just pay it.
Businesses try to capitalize as much as possible, so if a business used to offer free parking then now they can start charging for it. In real estate one's goal is to maximize as much profit per square foot as possible.
Even though parking fees made up only 3.1% of total revenue for the average hotel, they grew faster than total hotel revenue. In 2019, 17.0% of all the hotels in CBRE's annual Trends® in the Hotel Industry database reported parking revenue. This number rose to 20.4% in 2022.
Parking prices for have also risen to keep up with the local market and also to keep up with the rate of pay and maintenance since minimum wage in some areas has gone up.
Because parking is just like any other space. It has value. If it's underground, it cost money to build, and therefore needs to have a return. Depending on soil conditions, some places cost more money to build underground parking than others. If it's above ground parking that space can be developed for a higher purpose that will return more money than a parking lot.
Now, most places that offer free parking are strip malls, big malls, and major shopping centers. They calculate the cost of the parking into the rent for their tenants. Nothing in life is free!
Cyclical (economy rises and falls).
A lot of times it's hard to justify a parking lot on expensive land like in a major metropolitan city.
Oligopolies (like Diamond Parking) and not enough spaces so people charge more
I asked many different, longtime, real estate developers, landlords, managers of parking companies, finance professors, accountants, People that own parking lots and made their fortunes through that, property managers, ect.
I have concisely typed these answers below for your convenience. I'm sure that most people would just say it's capital swine and criminals price gouging, and while there is some truth to that it is slightly more complex. So for anyone who is curious…
Many things aren't correlated with inflation. Or have their own levels of inflation (tuition costs, computers, ect) as CPI is just a basket of goods.
Very circumstantial.
Supply and demand is what drives prices. Parking is expensive when demand exceeds supply. Especially as major cities like Seattle, Austin, Vancouver, Boise, ect continue to grow.
When it is very convenient (like in an apartment building) so that there is no competition.
Some places don't charge on the weekends as they believe free parking brings customers to their tenants businesses.
Some don't own the garage, such as the Hyatt Regency in Vancouver, BC. The hotel leases the parking garage from the company next-door so that even the hotels general manager has to pay for parking.
Some contract with a third-party company this specifically specializes in managing parking garages to to manage their parking. An intern the third-party company seeks to maximize profits.
Businesses charge the market price and if for example Marriott across the street is $2 less for parking, *most* guests of the Hyatt wont park there and walk across the street. They'll just pay it.
Businesses try to capitalize as much as possible, so if a business used to offer free parking then now they can start charging for it. In real estate one's goal is to maximize as much profit per square foot as possible.
Even though parking fees made up only 3.1% of total revenue for the average hotel, they grew faster than total hotel revenue. In 2019, 17.0% of all the hotels in CBRE's annual Trends® in the Hotel Industry database reported parking revenue. This number rose to 20.4% in 2022.
Parking prices for have also risen to keep up with the local market and also to keep up with the rate of pay and maintenance since minimum wage in some areas has gone up.
Because parking is just like any other space. It has value. If it's underground, it cost money to build, and therefore needs to have a return. Depending on soil conditions, some places cost more money to build underground parking than others. If it's above ground parking that space can be developed for a higher purpose that will return more money than a parking lot.
Now, most places that offer free parking are strip malls, big malls, and major shopping centers. They calculate the cost of the parking into the rent for their tenants. Nothing in life is free!
Cyclical (economy rises and falls).
A lot of times it's hard to justify a parking lot on expensive land like in a major metropolitan city.
Oligopolies (like Diamond Parking) and not enough spaces so people charge more
