Hi rise parking ratios

[Sheikh Yerbouti]

OK you big city generals.....

I'm working on a class-B highrise office building in the Phoenix CBD. The parking garage is too small; the parking ratio is 2.6/1000, in an area where 3.5 to 4.0 is more typical. There is adequate public transportation, but off-site parking is limited. The building was at about 72% occupancy on the value date (this is a retro appraisal), but I need to appraise at stabilized occupancy of 85%-90% for tax value. Existing leases indicate some tenants have been allocated spaces at a ratio of 4.0.

Adding two floors would bring the garage up to an acceptable ratio. It is certainly physically doable, but it would take about 6 to 9 months and render about two thirds of the existing garage unusable during construction.


Questions:

1. what is the range of ratios in your CBD?
2. how would you handle this in the income approach? Discount for rent abatement? Increased vacancy during construction? Temporary lease of offsite parking (may not be an option)? All of the above?

Also, one of my comps is a large class-A building with the same ratio as my subject, and sold at stabilized occupancy. It does not appear to have suffered from its dinky garage. It's within 1/2 mile of my subject.

What say you?

 

[PropertyEconomics]

Dave ... I have a question to ask quickly if I can ...

Does the current parking ratio actually speak to the vacancy rate? Based upon actual vacancy .. what is your ratio? Could it be argued that is the achievable occupancy until such time as additional parking is added?
YOu state you need to appraise to 85% - 90% occupancy ... what if the current occupancy is actually dicated by the parking ratio .. and has reached its optimum level? I believe limited parking availabilty would definately have an effect on occupancy and your building may well show support that as a theory in actual practice.

Ok that was more than one question .. sorry

 

[Sheikh Yerbouti]

Dave ... I have a question to ask quickly if I can ...

Does the current parking ratio actually speak to the vacancy rate? Based upon actual vacancy .. what is your ratio? Could it be argued that is the achievable occupancy until such time as additional parking is added?
YOu state you need to appraise to 85% - 90% occupancy ... what if the current occupancy is actually dicated by the parking ratio .. and has reached its optimum level? I believe limited parking availabilty would definately have an effect on occupancy and your building may well show support that as a theory in actual practice.

Ok that was more than one question .. sorry

PE.....actually the property was experiencing a rapid lease up after a rotten year in 2004; the occupancy continued to increase after my value date. Also, since my OP, I did some more digging and learned that my subject's ratio actually is very typical in the CBD (that's what I get for trusting CoStar :new_snipersmilie. Some of my comps actually have lower ratios than my subject. So I got worked up about nothing it seems.

 

[CBBoston]

CoStar is merely a possible maybe lead.

CBD parking ratios in other cities really don't have anything to do with the city you're working in. In some CBDs the planning gurus have decided to reduce downtown traffic congestion by requiring almost no structured parking with offices. Some still hold to the 4 per 1000 rule of thumb. If parking was inadequate (good work doing the extra digging to find out what they actually were) that should be reflected in the rentals rate for the property. Some might say vacancy rate is affected too but vacany rates are usually a function of asking rents.