Investors Eye New Purposes for Urban Parking Garages

September 16, 2020

Investors and developers are rethinking conventional parking garages in city centers, looking to take advantage of these large swaths of space. The pandemic has left many of these parking garages mostly empty as more people work remotely. But even before the pandemic, ride-hailing services like Uber and Lyft and the rise of urban bicycling infrastructure had been leading to a decline in car ownership in the city. Now, developers are targeting urban parking garages as prime sites for redevelopment.

“By 2018, 2019, 2020, I would say every time I would take a garage to market, 50 percent of the queries start with, ‘Hey do you have the zoning analysis, what else can I do here?” David Schechtman, a senior managing director at Meridian Capital Group, told Commercial Observer. “Any time a garage comes to market there’s tremendous interest in it.”

And those interested parties aren’t thinking about parking.

The developer of one of the tallest buildings in the U.S. is overhauling what was once the largest municipally owned parking garage in Boston. The developer, Millennial Partners, is building a 691-foot, 1.6 million-square-foot condo and hotel tower in its place.

The number of parking garages and lots in the U.S. has increased over the years—from 14,200 in 2000 to more than 19,000 by 2020, according to IBISWorld research. Annual revenue has increased too.

But since the COVID-19 outbreak in the U.S., time spent driving has plunged and fewer people are needing a place to park. Owning or investing in a parking garage hasn’t proven very lucrative, even if some believe the dip is temporary.

“People started saying ‘maybe it should be storage, or an education facility, or rehab or medical,” Schechtman told Commercial Observer. “People started looking at landlocked garages and saying ‘OK, I can’t build a condominium here, there may even be a condominium upstairs, but what else can I do?”

Some owners have converted unused spots during the pandemic into storage units or even last-mile delivery spaces for e-commerce providers such as Amazon.