Commoditization – the act of treating something as a mere commodity.
I was speaking to senior member of the leadership of a major parking operator the other day and of course held forth on my issue with the Parking Experience and the industry’s need to make parking something people want to do, not have to do. He agreed completely with one caveat.
“Don’t forget that many asset managers are forcing the commoditization of parking. For instance, we will run a location for $400 a month, plus expenses. It will generate perhaps over a million to the owner. An asset manager who wants to lower expenses will cancel our contract and take in another operator who will do it for $50 less. Where is the money going to come from to enhance the Parking Experience?”
He has a point. I have been writing about this issue for years. Owners may understand that they want the best for their tenants, but the asset manager, the building manager, is also tasked with keeping expenses at a minimum, and one area to scrimp is parking. Turn it into a commodity that is purchased solely on price. How do we fight against that?
In previous blogs Brandy, George, and Brian spoke of customer service and treating the customer ‘right.’ How can you do that when your boss, in this case an asset manager, is only concerned about lowering expenses? They don’t seem to be concerned at all about maximizing revenue. They treat parking like an elevator or restroom. You gotta have em. There are 20 seminars at BOMA on how to reduce your costs with new roofs, or air conditioning, or elevator upgrades. But how many do you find concerning parking? One or two?
Shopping centers are finding that they need great parking operations to attract customers, but office buildings often don’t have the same issues. If you are going to see your doctor or lawyer or investment advisor, you have to park there. You do so and pay the fee. That’s how it works. If the parking is crummy, so be it. At a shopping center if the parking is crummy, you drive to the one down the street.
The parking operators fight this every day. Keep the costs down. Remove expensive staff. If possible, remove all staff. Have one manager for four buildings. Pay minimum wage. Take out every other light blub to save electricity. The list is endless.
Compared to the building rent, parking revenue is a small number. It doesn’t seem to get anyone’s attention. If an operator wants to keep a location, they have to keep expenses down.
It’s a difficult conundrum.