Profiting Post-Pandemic

Amid a Changing Landscape, Parking Operators Must Adopt New Technologies, Practices to Remain Competitive

By Wes Guckert

While much of the post-pandemic world has returned to something closely resembling normal, the workplace continues to evolve. Perhaps nowhere has this change been more evident than in the half-empty office towers that dot downtown skylines in cities across the country – not to mention the adjacent parking garages and lots where many once-fought-over spaces now sit empty.

Remote work, a necessity when the pandemic first hit, is now the norm in many workplaces. Nearly two-thirds of the companies surveyed in August 2023 for a recent article in Forbes offer remote or flexible work environments. Although 38% of these businesses indicate a preference for an in-person workforce, 56% of professionals surveyed for the article said they know someone who has quit their job due to return-to-office mandates. Sixty-three percent are willing to take a pay cut to work remotely.

One thing seems certain: Despite recent data indicating more businesses are mandating some form of in-person work, the pandemic kickstarted a radical change in which working from home is now five times more common than it was just five years ago. Moreover, as baby boomers age out of the workforce and are replaced by younger workers, more companies appear likely to adopt hybrid or fully remote work policies to attract and retain the best and brightest talent available.

That shift could represent a major blow to the $144 billion parking industry unless lots and garages are willing to evolve. At present, the U.S. has about two billion parking spots, according to estimates by The New York Times. That’s nearly seven parking spots for every car. In some cities, as much as 14% of land area is devoted to parking because of zoning codes that mandate parking requirements for various real estate projects.

What are parking facilities to do? Clearly, parking lot and garage operators in many urban areas must act now to find new uses for all those empty parking spaces or find themselves facing extinction.

Local Conditions Vary

It’s important for garage operators to recognize that the changes brought about by hybrid work arrangements are not uniform across the board. For example, businesses located in suburbs where public transportation is limited may still have a reasonably high demand for parking.

Similarly, some businesses simply don’t lend themselves to remote or hybrid work arrangements. Manufacturing and healthcare facilities, for instance, typically demand a physical presence on the part of most of their employees. As long as these types of employers cannot enact flexible work policies, their parking requirements will likely remain nearly as high as they were in the years before the pandemic.

In addition, not all urban areas are the same. Cities such as Baltimore and Portland, Oregon, have experienced central business district office vacancy rates exceeding 30%, accompanied by hundreds of half-empty garages and parking lots. However, the vacancy rate in other cities has hovered closer to the standard 8% to 10%, with garages and lots performing more or less as they did pre-pandemic.

Although exceptions exist, the fact remains that fewer people are driving into urban areas five days a week, if at all. Couple this with two other recent trends — the emergence of ride-hailing services like Uber and Lyft, and the rise in online shopping and the subsequent decline in traffic at retail and shopping centers — and many parking facility owners and operators would benefit from rethinking their business models.

Technology Can Help

To deal directly with this issue, some operators have turned to technology. So-called smart parking solutions leverage property technology solutions, digital tools, and real-time access control data to simplify and modernize the entire parking process. Paper tickets and credit card payments are replaced by license plate recognition and automated vehicle recognition, while drivers can use a third-party app to set up autopay and parking validation.

Such solutions enable parking operators to manage their entire operation, including customer service, maintenance, and security, with just a few clicks. This not only makes for a more efficient operation, but also enables operators to decrease staffing requirements and operational costs.

Operators have also turned to a trend that was popular in the 1990s — the use of assigned parking spots in office garages. With hybrid work front and center, companies may now assign multiple employees to the same parking spot based on their in-office days. Thus, a worker coming to work on Mondays, Tuesdays, and Wednesdays can share a spot with someone arriving on Thursdays and Fridays. This process makes for a more efficient use of available space, while enabling large swaths of unused parking to be dedicated to another purpose.

Creativity Is Critical

These purposes are limited only by the creativity of the operators and the physical constraints of the actual facility.

During the pandemic, for example, entrepreneurial garage operators began converting their facilities into everything from pop-up industrial warehouses and self-storage spaces to gyms. Garages having sufficient floor-to-ceiling height and level floor design were transformed into parking and/or loading areas for delivery trucks, such as the Amazon fleet serving the local market. The same needs could be met today.

Similarly, food truck parking and outdoor dining emerged during the pandemic as two ways to use empty parking spaces and generate income for garage or lot operators. The popularity of both measures could represent a viable option for operators that have unused parking on their hands to respond to ongoing demand today.

Unused parking at shopping centers and malls could also be converted and repurposed into outparcels for small or start-up retailers unable to afford stalls in the existing facility.

Converting Parking into Housing

Another use that would also help address one of today’s most vexing problems — the affordable housing crisis — has shown promise. In some cities, public officials are working with developers and garage operators to turn parking facilities into affordable housing or shelters. The structure of many garages, combined with their near universal dimensions based on the unitized size of a parking space, enables easy placement of prefabricated modules within the garage’s concrete shell. These units can also make use of the existing vertical circulation and utility connections within the garage.

In West Los Angeles, for example, an underused parking lot owned by the city’s Department of Transportation was converted into apartments for low-income or homeless seniors. In Honolulu’s Kaka’ako neighborhood, an underutilized parking lot was replaced with a 16-story high-rise with 111 studio apartments, providing affordable housing in an area that’s quickly gentrifying.

The architectural firm Gensler developed what it called the MOD concept to house the homeless in Los Angeles by retrofitting old garages with pod-like living units. A pod is a low-cost, prefabricated living unit that is built in a factory and delivered as a compact, portable, premade unit. Although pods can be customized, they typically consist of 1 to 3 rooms, are sustainable, and occupy a small area. However, the MOD concept has yet to be tried.

Although possible thanks to innovations like the pod, retrofitting existing garages is not always an ideal solution, given structural challenges such as low ceilings, sloped floors, and potential added loads that could render some facilities structurally unsound.

Therefore, replacing garages with new construction would seem to be an easy choice, but here again, there are issues to overcome. Parking minimums incorporated into many local zoning codes, for example, require developers to include a certain number of parking spaces for each new unit built. In some cases, inflexible zoning requirements prohibit developers from converting a commercial property such as a parking garage into a residential property.

Although the response to such impediments has been slow, some urban areas are following the lead of cities such as Austin, Texas, where the city council recently voted to eliminate parking mandates citywide. New regulations in states such as California no longer require parking for new construction near transit.

As cities continue to reinvent themselves in the wake of the pandemic, a clear opportunity exists for parking operators to transform unused parking into performing, profitable units that are better positioned to meet changing market needs. Operators, and their banks, must determine how best to adapt their properties to position themselves for future success.

Wes Guckert, PTP, is president and chief executive officer of the traffic engineering and transportation planning firm The Traffic Group. He can be reached at wguckert@trafficgroup.com.