Magazine

Garage Construction Holds Firm for 2007

Dale Denda

The year of 9/11 saw a downturn in the parking garage construction market. The bottom dropped out of all construction after the terrorist attacks in 2001. Hundreds of projects were put on hold or simply abandoned. However, in the past two years, many of those projects have been brought back to life.

“We aren’t back to the halcyon days of the late 1990s,” said Dale Denda of the Parking Market Research Co., “but we are getting there.”

Owners are facing some new problems as they bring projects back on line. The major one is cost. “A garage that budgeted at $11,000 a space when planning began is now costing $16,000. That nearly 40% increase is causing developers and owners to take a second look.”

This review process is slowing down the construction phase of many projects. But there is a second problem. Depending on the type of garage being built (poured in place versus precast), some regions with a lot of construction simply don’t have the crews available to build the projects. The is most apparent with poured-in-place units.

“Budget is the real holdup, however, “ Denda continued. “The cost not only of concrete and steel, but also of labor is driving a number of projects back into redesign.”

Many owners are rethinking the number of spaces needed. “Where an original plan called for an 800-space facility, we are seeing them brought back with 600 or even 400 spaces,” he said.

The average number of spaces for garages starting in 2007 is 872. The Northeast region is higher, with a count of 1,100. “These numbers include ‘mega garages’ – those with 5,000 or more spaces,” Denda said. “We are seeing a very large number of such garages hitting the project list. These are primarily casino/entertainment projects such as the ones being built to support the huge hotels in Las Vegas, and the consolidated Rental Car (CONRAC) Projects being built to take the rental car operations off-airport.

“One project that has been very slowly working its way through the process has been the CRC at Miami International Airport,” he said. “This is a classic example where the airport needs more parking, and in order to free up parking for customers, they build an extremely large rental car facility off-airport. With the rental car operation moving off-airport, it creates high value and convenient parking for patrons.”

There currently are 415 projects that are either under construction or that will start in 2007. This is up slightly from 2006. PMRC sees 810 projects starting in 2007-2008.

Although the construction projections are divided by regions, it turns out that six states make up 45% of the starts. The top three markets are California, Florida and metropolitan Washington, DC. Texas is ranked fourth, and New York and Pennsylvania tie for fifth.

Generally, what this means, he said, is that not only will consultants, architects, engineers and construction companies be busy for the next two years, but revenue control equipment suppliers, lighting manufacturers, and suppliers of coating, elevators, signage and communications equipment should see a healthy period upcoming.

“With just under two new projects breaking ground or moving into critical path (final design) every day, suppliers should see a healthy revenue period,” Denda said. “Of course, this doesn’t include refurbishments, upgrades and replacement equipment for the nearly 20,000 existing structures. The upcoming period looks to be very positive.”

Another question, besides the cost increase and producer market share issues we’re tracking, concerns delivery of parking equipment. Broadly speaking, there are 2 options: In or out (of the main construction contract). The owner has the option of including access/revenue equipment as part of the general delivery contract (together with the concrete and steel, lighting & mechanical trades) in which case the purchase is essentially made by a construction contractor. Value engineering (ie addressing cost overruns) also occurs, as deemed necessary, through that agent– and it is not uncommon for an entire access/revenue system to be cut in half or eliminated altogether.

Alternatively, the owner procures directly, independent of the construction process.

Article Abstract from May, 2007




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