Parking Revenues Said to be $18 Billion, Maybe …
The years 2007 and 2008 could be healthy ones for what may become an $18-billion parking industry, according to Dale Denda of the Parking Market Research Co. Speaking at the Parking Industry Exhibition, the researcher also projected more than 400 garages would be built during each of the next two years.
Denda was quick to point out, however, that the $18 billion figure is on the high end of his estimates, and his charts showed a figure closer to $13.7 billion, with an error factor of up to 30%. This is due, he says, to the problems the Commerce Department has in collecting data about parking.
He gave a couple of examples.
In one case, airports report income from parking and it’s specific and well-documented; however, the operators that run the airports also report some of that as income. This type of “double” reporting may go on in other sectors of the market. In and of itself, this doesn’t affect the total size, Denda said, but it reflects the problems in dealing with government numbers.
In another and more crucial case, all of the income of certain public entities aren’t included in the government numbers. This may not seem like a lot until you realize that it includes the non-airport parking income of NY/NJ Port Authority (it owns a large number of non airport parking facilities), and other types of quasi government entities such as commuter train parking (SEPTA, WAMATA, etc.) That can skew the totals substantially.
Denda also pointed out that in the case of many small, privately owned operators; the acquisition of gross income data was difficult. Much of the data was from voluntary surveys, and larger companies tend to have the resources to respond to such requests. This, too, adds to the potential for error on the plus side.
He was optimistic, however, about the construction of freestanding parking garages for 2007 and 2008. “Statistically there will be, on average, 1.5 garage starts each working day for the two-year period,” Denda said, “the numbers would suggest that the amount of work for revenue control, lighting, consulting, design and construction companies will be substantial.”
As the chart nearby shows, the public (cities, states) and private (developers) sectors have more than half of the construction projects. Higher ed, joint public/private projects and airports round out the projections.
Parking revenue has been relatively stagnant in the past three years, Denda said, and he projects little increase over the next three. He posits a reason for that flat line.
“In the past 15 years, the U.S. construction market has built about 4.4 million structured spaces,” Denda said. “Of those, between 1.7 million and 2.5 million spaces are not controlled on an hourly or daily basis for fee (or any other parking transaction). Moreover, about 65% of this new construction (2.9 million spaces) was built since 1999.
“This translates to the fact that over half the new spaces built have been designated ‘free’ parking (i.e., non-revenue generating). Of course, some would argue that the parking isn’t ‘free,’ but that the cost is bundled with rents or increases in other prices,” Denda said. “In fact, much of this parking is provided as an amenity by the development owner as an inducement for rental and use. This fact can have great implications as to future overall parking revenue generation.
“So the question is: Is a major factor in the flat line of parking revenue over the period 2002-2008 a reflection to the increase in supply of non-revenue generating parking? One might comment that it was due to a post-2002 downturn, but the government data don’t support that. The GDP has increased at 3.5% per year during the past three years. I think the answer, therefore, has to lie elsewhere, most likely in the increase of non-revenue-generating supply.”
Denda went on to explain the issues in determining the gross revenue for the parking industry. Some included the complexity (difficulty of estimation) of the details, the sizes of constituent elements which are isolated, and a recognition of what is included (cash or equivalent transactions) and excluded (in lieu payment). Revenue has increased nearly 50% in the past decade. It reached its peak in 2000-2001, and then basically flat lined. The economy, however, after 2000-2001 downturn has continued to grow at near record rates.
His company’s research included the examination of available government data, the extrapolation from that data, and the determination of the value of the result.
Denda pointed out that the Commerce Department (Bureau of Census) conducts both five-year and annual surveys of various sectors of the business economy, including parking. Based on those data – adjusted for omissions and other methodological problems – PMRC estimated the total operating revenue (off-street & on-street) for the domestic parking industry.
This estimate includes all revenue generated from off-street facilities (lots and garages) by cash or equivalent transactions through facility operator or paid to owner; fees and all other income reported by private operator (off-street and on-street); and all on-street revenue (including fines) collected by public jurisdictions. But it excludes all expense accounts (operating expense) and other outlays (i.e., capital construction) and no-cash (in-lieu) internal transactions that are defined by (non-parking) real estate operation.