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‘Network Effects,’ Parking Data, and PPP in the Parking Industry

August 14, 2017

Cassius Jones

In the San Francisco Bay Area, we talk a lot about “network effects” – the idea that a product or service gains value as more and more people use it. The obvious examples are social networks such as Facebook – it wouldn’t be worth much if the network consisted solely of my grandmother and me. There would be limited value to me as a user if I could check in on only my Gram, and advertisers wouldn’t be willing to pay much to advertise products or services to such a small audience.


But network effects aren’t phenomena specific to the fancy digital networks of our modern age. Other examples include inventions such as the telephone – what use is it to own a phone if I can call only my Gram? (Actually, she might like that.)


Financial exchanges also benefit from network effects. As the number of traders active on the New York Stock Exchange increases, “liquidity” (the ability to buy and sell stocks quickly) increases, and transaction costs decrease. Increased liquidity and lower costs draw more people into the trading business, which further improves liquidity and lowers transaction costs. It’s a virtuous cycle.


I think there are network effects in the parking industry, too. Mobile payments are a good example. If a mobile payment provider is particularly popular within a city, more cities around that city will adopt the solution. As the mobile payment solution grows its regional coverage, parkers will find the tool more valuable, because it can be used to park in more and more places – causing increased adoption by neighboring cities and, in turn, more value for users.


But the network effect I’m most excited about relates (unsurprisingly) to parking data – specifically, what happens when multiple parking operations elect to share their parking data with one another over a single platform.


We at Smarking Inc, are doing just that in Walnut Creek, CA. The city and ParkSmart Inc., a provider of private off-street parking management services, have elected to use the Smarking platform to share occupancy and duration data.


The city manages about 4,000 paid spaces in Walnut Creek, while Bob Power’s company, ParkSmart – which also specializes in the development of public private partnerships (PPPs) in high-end downtown shopping districts – manages an additional 8,000. By working with the two entities, more than 80% of the city’s paid parking inventory has been digitized on the Smarking platform.


To be fair, this specific public private partnership is by no means brand-new. CEO Power and the city have been working closely for a long time. But by codifying the partnership over a dedicated platform, we are enabling some exciting new possibilities:


1. Holistic and robust understanding of how demand interacts with supply:


This means no more manual counting or static occupancy reports. In Walnut Creek, we can see in real-time where parkers are parking, regardless of whether it’s in a publicly or privately managed space. Parkers don’t care if a space is public or private. So, when we make policy decisions based on occupancy patterns, why would we look at only one side of the equation?


2. Reduced parking minimums:


With a digitized record of historical occupancy patterns, planning commissioners can now analyze where available inventory is and allow for reduced or eliminated parking minimums when appropriate.


3. Enabling redevelopment:


Most real estate owners are in the parking business by way of some other business. Retail store owners are primarily concerned with selling their goods to consumers. Office building owners want to lease space to tenants. Apartment building landlords are looking to collect rent from families and individuals. All of these real estate verticals provide parking as a means to some other end.


With a holistic understanding of inventory – which spaces are needed and which ones are not – we can start to redevelop land allocated to parking for a better and higher use: homes, stores, offices, parks, sidewalks or, who knows, maybe bike parking.


The network effect relates to parking data – specifically, what happens when multiple parking operations elect to share their parking data over a single platform.


While what’s going on in Walnut Creek is genuinely exciting, the possibilities for expansion are most promising.


Another large owner of paid parking inventory in Walnut Creek is the Bay Area Rapid Transit (BART), which manages a 2,000-space lot in the city. It primarily serves commuters who take the train into the city, and is very crowded Monday through Friday, but hardly sees any demand on weekends, holidays and overnight.


Those 2,000 spaces represent a lot of asphalt – what if that space could be reduced or repurposed? Alternatively, if BART parking has excess capacity, we can redevelop other parking lots and steer the associated demand into BART’s lot.


BART also happens to be the largest owner of paid parking in the Bay Area, with more than 40,000 spaces under management. If we extrapolate our little experiment in Walnut Creek to the entire Bay Area, things get even more interesting.


The most common prediction about self-driving cars and the future of the parking industry is that there will be less space allocated to parking and that the remaining spaces will be on the outskirts of big cities.


Assuming this prediction winds up being directionally correct, wouldn’t it be helpful to know where those spaces will be and get to planning on how to use the remaining space?


We could get to work redeveloping parking lots and monitor how demand shifts as inventory is reduced. This is likely to be a gradual and iterative process. Thanks to the forward thinking in Walnut Creek, we’ve already started.


Cassius Jones, Senior Account Executive at Smarking, You can contact him at Cassius@smarking.com.



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