The coronavirus pandemic has wreaked havoc on urban life, both among its occupants and its property. Offices shut down, taking retailers that served that workforce with them, and the return to the office that looked so promising this spring has seen hopes fall as the Delta variant surges.
But there is one commercial real estate niche that has shown what might be a surprising bit of resilience -- and it’s because of the vicissitudes of the pandemic itself.
That would be parking garages, which, according to a recent article in Bisnow Chicago, are seeing some uptick in business because of more people returning to their office space and/or heading back into the city for dining and entertainment.
Daily commutes being replaced by hybrid work models and entertainment visits
The article cites data from Smarking, a business intelligence provider for parking vendors, that says the recovery it’s seeing among more than 2,000 parking locations nationwide is mostly coming from transient parkers rather than daily commuters who usually buy monthly permits. (Many are now returning on a hybrid remote/office model, if coming back in at all. That raises questions about just how much parking many CRE properties will actually need going forward.)
Wen Sang, CEO of the San Francisco-based company, says daily commuter use in the 50 parking facilities it tracks in Chicago, for instance, was down more than 30% in July and August compared to those months in pre-pandemic 2019. But transient parking was slightly ahead of those two months in 2019.
"The general trend is that transient parking has recovered a lot faster," Sang said. "People are out and about, going out to dinner at restaurants and doing what they want to do."
A reluctance to use public transportation also is feeding into that trend. "Many consumers of entertainment or restaurants downtown are loath to use transit," Joseph Schwieterman, director of the Chaddick Institute for Metropolitan Development at DePaul University, told Bisnow Chicago.
The Millionacres bottom line: Investing in a new normal
With fewer office workers working full-time away from home, parking garage operators will have to adjust to a new normal, too, notes Sang of Smarking. "Before the pandemic, business was good, and no one was under pressure to do anything different," he said. "But our view is that the industry needs to develop flexible parking options and make customers’ lives easier."
Indeed, use of paid parking space is just one of the many tea leaves to read when it comes to discerning how and when business as usual will recover from COVID-19. Discerning real estate investors can profit by paying attention to all aspects of the work-from-home trend.