The coronavirus pandemic did a number on office buildings. Over the past 18 months, buildings in major markets like New York City have largely sat vacant as companies have upheld remote work policies to keep employees safe. That's been really bad news for office REITs, or real estate investment trusts.
But at this point, it's clear that many companies have had enough of Zoom meetings and collaboration from afar. A large number of major employers announced plans during the summer to have workers return to the office in the fall. And while many of those plans have since been postponed due to the delta variant, they're still in the works.
At some point in the not-so-distant future, companies are apt to put the brakes on remote work, at least to some degree. And once that happens, it's not just office buildings that will benefit. Parking garages could also enjoy a surge in demand, an opportunity real estate investors may want to capitalize on.
Why parking garages could boom
Workers in major cities have long relied on public transportation to get to and from the office. But while employees may be on board with the idea of returning to office buildings -- especially if their companies impose vaccine mandates and/or implement stringent COVID-19 testing protocols -- many are still hesitant to utilize public transportation.
When we think about what taking public transportation entails, that makes sense. Anyone who's ever traveled in New York City during rush hour knows full well that being packed into a stifling hot subway car is par for the course. And while masks are generally mandatory on public transportation, enforcing that rule is easier said than done.
As such, it's easy to see why it could be a long time before commuters go back to taking public trains and buses. And so demand for garage space might soar once more employees are forced to return to in-person work.
Hybrid work schedules might further boost the demand for parking spaces. For employees who report to an office every day, a monthly transit pass is generally a cost-effective commuting option. For those who only have to come in once or twice a week, the numbers change. Often, the cost of a daily trip on a bus or train can be far from economical, and in those situations, workers may opt for the convenience of driving instead. This means that parking garages may see increased demand not just for monthly spaces, but for daily spaces, too.
Furthermore, taking public transportation often means having to adhere to a specific timetable -- one where missing a train means waiting 30 minutes for the next one to arrive. Given that so many workers are used to having flexible schedules after 18 months of remote work, even those who don't have safety concerns might still shy away from public transportation so they're free to come and go as they please. Once again, parking garages stand to benefit from that particular mindset.
Get in on the action
All told, there's plenty of reason to believe that parking garages will be in high demand in the coming year. Those looking for some diversity in their portfolios may want to consider parking garages as a viable, rewarding near-term investment.