You’re Losing Parking Revenue
More than 90% of landlords who own assets with monthly paid parking are losing money each month. The percentage of loss will vary between buildings, but more than likely, each landlord is losing, conservatively speaking, 10% to 20% in revenue a month without even knowing it.
You ask, “How, and why?” The answer is quite simple. It happens during lease negotiations. You have a savvy tenant and a savvy landlord who negotiate leases. Within that lease, your parking language is addressed, negotiated, agreed upon and, ultimately, completely forgotten.
Base rent and additional rent are typically in paragraph three, four or five of the lease. Every person in your company studies it, accounts for it, and cross-checks it.
Parking is buried deep in the lease and is rarely even granted an exhibit. Few people look at it, and if it gets more than a few minutes of attention – mainly for language to be copied for your parking company to administer – you’re lucky. Sometimes your team is the administrator. That’s exactly why more than 90% of landlords are losing money every month.
Yes, parking is one of the largest revenue line items, yet few understand how to maximize it. Most landlords trust their parking companies to provide the systems to control revenue and, yes, you are more than likely one of the 90% of landlords or property managers losing a substantial sum of money every day.
You may have tried to find the answer and you may have implemented what you thought would be the answer, but you are still losing money.
If you want to stop the loss, you must have a solid process. It will save you thousands of dollars and stop any potential future losses immediately. The process starts by immediately giving attention to the parking language in every lease as soon as it is signed. This attention to detail must continue throughout the life of the lease, including amendments.
Every lease should have its parking language analyzed, summarized and documented in such a way that the parking company can accurately bill the tenant each month. This is called a “Parking Abstract.”
The Parking Abstract is a living document whose terms will change as parking usage changes, parking rates change, critical dates approach, lease terms change and any other variable that affects each parking card issued in your garage. Someone other than your parking vendor should be responsible for its ongoing accuracy.
The Parking Abstract should be in a central location where all parties to the process can access it. This includes your corporate office, as well as that of the parking company, garage manager, property manager and, ultimately the portfolio and/or asset manager.
Next, the terms of the Parking Abstract should be compared with each tenant invoice every month. Unlike base rent, parking charges vary monthly, and whereas a simple base rent schedule takes you through the life of the lease, no simple schedule exists for parking revenue.
During the monthly billing cycle, one must compare key cards used against what the lease says should be used; discounts or rate increases applied; prevailing rates as recommended by your parking company tracked; and then ensure that the bill actually sent to your tenant is accurate when compared with the lease or Parking Abstract.
When errors are found, you must make sure the parking company follows up and invoices are corrected the following month. And don’t forget the minor details. For example, if a tenant returns a key card for a prior month, the credit is based on the terms for the prior month, rather than the current month.
Once you’ve established your process, remember to check your aged receivable report monthly and make sure your parking company accounts for all billable key cards each month (known as “key Card Reconciliation”). Typically, this information is found in your monthly parking report. If it is not in your report, ask for it. There should be no extra charge.
Although parking revenue seems simple on the surface, it is a more complex formula than any other revenue line item on a building’s income statement. Unfortunately, it receives the least attention.
Until recently, the parking industry has been without a simple solution, one that doesn’t take months to start and continuous hours of effort to maintain. After years of waiting for an answer and research with many consultants, owners and property managers can now ensure accurate billing with the use of an electronic Web-based system that very easily automates the process forever.
We strongly encourage you to get your process in order so you can feel confident that “all” your revenue line items have been given proper attention. You also are guaranteed, based on recent statistics, to immediately increase your portfolio value.
Karinna Cassidy is with Acre Solutions. She can be reached at email@example.com.