Parking Garage Versus Surface Parking

[NewJerichoMan]

Here's a little thought experiment, if you will, which is more desirable: parking garage or surface parking?

Few parameters. These are existing buildings. This is an adjustment for a sales comparison approach. There are disagreements within the firm as to which way the adjustment should go.

Subject is a Class A Office Building. Using big, round numbers, subject has 100K of RBA and 150K of Parking Garage. This is a significant improvement for the area. Top 1% of the local office population.

All things being equal, if an identical building is across the street, has 100K of RBA, same quality of finish, but has the surface parking equivalent of that 150K parking garage, which property is superior?

Parking garage compacts things out of necessity (usually lack of land). Pros of parking garage: tenants have shorter distance to walk, rain cover, etc. Pros for surface parking: Landlord with the surface parking has significantly less upkeep and associated expenses.

Given these are existing buildings, I think a decent case could be made for lower taxes on the site withOUT the parking garage.

Bonus curve ball: Also, the terrain where my subject is located is not ideal for parking garages and skyscrapers. Can and are they built here? Sure, but it's not ideal, or said another way, it's more costly to do so.

 

[Michael P Jacobs MAI]

I already know this thread is worthy of CE credits and it hasn't even started yet.

 

[hastalavista]

Do you get more rent with the parking garage?

Edit to add: Or is the occupancy rate increased because of the garage?

 

[Meandering]

You don't have to snow plow, or leaf blow, or deal with as many potholes inside a garage as the outdoor space.

Conversely,

Doesn't the parking garage warrant an insurance premium that the outdoor parking does not?

And,

is onsite open parking available to patrons of other businesses in the area? and is the garage parking available to patrons of other businesses in the area? Or, are the parking spaced strictly reserved only for the employees and patrons of the business to which the parking space belongs?
.

 

[Meandering]

And,

Would the height of the parking garage cause a visual obstruction or concern for either the property that owns it, or for neighboring properties?

.

 

[Meandering]

I go with lower taxes for out door parking, and higher taxes for property with garage parking.

 

[NewJerichoMan]

Do you get more rent with the parking garage?

Edit to add: Or is the occupancy rate increased because of the garage?

If you choose to make the argument that one could command higher rents because covered parking is superior to surface parking, it's a defensible position. To counter, I could make the statement that surface parking has a lower expense burden, and despite the lower rents, might come out ahead on the bottom line.

In my specific case, my building is 100% occupied, with a waiting list. It's a Class A property and looks the part. But the demand driver for this property is a proximate hospital. Whether the parking is "surface" or "parking garage", either way demand is going to be strong. For the sake of this hypothetical, parking ratios are equal between the buildings.

 

[NewJerichoMan]

is onsite open parking available to patrons of other businesses in the area? and is the garage parking available to patrons of other businesses in the area? Or, are the parking spaced strictly reserved only for the employees and patrons of the business to which the parking space belongs?
.

The building is 3 stories. The parking deck is at-grade. Below is two basement levels for all one's parking needs. The parking is not visually intrusive, mostly hidden in fact, and this property is an island unto itself. No transient parkers venture here.

 

[PL1957]

Here's a little thought experiment, if you will, which is more desirable: parking garage or surface parking?o.

desirable to whom? Tenant? Owner? Customer? Delivery man? All will have different perspectives.

 

[hastalavista]

If you choose to make the argument that one could command higher rents because covered parking is superior to surface parking, it's a defensible position. To counter, I could make the statement that surface parking has a lower expense burden, and despite the lower rents, might come out ahead on the bottom line.

In my specific case, my building is 100% occupied, with a waiting list. It's a Class A property and looks the part. But the demand driver for this property is a proximate hospital. Whether the parking is "surface" or "parking garage", either way demand is going to be strong. For the sake of this hypothetical, parking ratios are equal between the buildings.

I wouldn't make the argument that just because there are higher rents or lower occupancy, the property with the garage is worth more; that would depend on how the additional income is offset by the additional expense.

I would look to see if there is a rent differential to determine if it is a positive amenity in the market as far as the tenants are concerned.

If I found it to be a positive tenant appeal and a net operating income positive or even neutral influence, that would probably influence me a bit in my final value reconciliation.