Lots of Opportunity
Understand What Factors Should Drive Cost-Efficient Parking Structures.
Many commercial real estate developers today realize the importance of functional parking structures. If a parking structure is inefficient due to poor design or inadequate site dimensions, the development's cost may be too high to make it feasible. And if a development relies on repeat business from customers who have other choices, a poorly laid out parking facility with confusing traffic patterns and an unfriendly environment could ruin business.
While commercial real estate professionals who are not developers may not be directly involved with the planning and designing of parking structures, they should understand the costs as they relate to a development's success. Moreover, as street parking in downtowns becomes scarcer, parking structures represent an investment opportunity to consider.
Most parking structures are built as necessary adjuncts to other property types and may or may not contribute to the development's profitability. If a pro forma analysis of the parking structure indicates that the costs of financing and operating the parking facility exceed the projected income, then the parking structure must be subsidized by tenant rents. If the income exceeds expenses, the parking structure will contribute to the overall profitability of the project.
Parking structures built as investments are relatively rare and require a special set of circumstances for success. Because most city zoning ordinances require an adequate number of off-street parking spaces with each new development, a location where parking demand exceeds supply is important to find. This sometimes occurs in downtowns where older buildings are being reused, thus increasing an area's density. A parking demand study should be prepared to determine the extent of the area's parking deficit and its long-term vs. short-term parking availability.
Then a feasibility analysis can project construction costs, operating costs, and parking income. When projecting income, it is important to take into account that increasing the supply of parking in the neighborhood may reduce parking rates.
The proportion of short-term parking to long-term parking also affects income. Because short-term spaces turn over as many as four to six times per day, they generally produce more income than long-term spaces, which generally are leased monthly.
If the pro forma indicates a reasonable return, the structure may prove to be a good investment because historically, parking rates have risen faster than labor rates and other operating expenses.
Potential locations for parking structure investments include those near large medical complexes where turnover is high, in revitalized downtown areas where supply may be inadequate, or near airports where off-airport parking rates may be sufficient to provide a good return.
Developers and investors should note the factors that contribute to the cost-effectiveness of parking structures. After geographic location, land costs are the biggest factor affecting a structure's economic feasibility.
If land costs are less than $20 per square foot and adequate land is available, a surface parking lot may be the best choice. If land costs run between $20 psf and $100 psf and the site is large enough, a free-standing parking structure may be ideal. If land costs exceed $100 psf, parking often goes underground.
Construction costs for parking garages vary based on the type of structure. Clearly, surface parking is the least expensive to construct, averaging about $1,500 to $2,000 per space depending on zoning requirements for parking dimensions and landscaping. The cost per space for free-standing parking structures is derived from combining the area per space in sf and the cost psf of construction.
Both of these elements depend on several variables. For example, an irregular-shaped site may create wasted areas within the structure, resulting in a higher area per space. Likewise, a narrow site may result in a shallow parking angle, which is less efficient than steeper angles or 90-degree parking. Less efficiency means more sf per space and hence a higher cost per space.
A structure's design also affects its required area per space. A level-floor structure with connecting driving ramps results in a higher area per space than a structure with ramps with parking spaces. In structures with angle parking and one-way traffic, a two-bay structure with a double-helix pattern has a lower area per space than one with an end-to-end loop configuration.
Municipality parking standards also affect the area per space. Some cities require wider spaces and aisles, which results in a larger area per space and therefore higher cost per space.
The structural system is the biggest cost of a free-standing parking structure. Taller structures have a higher average cost per space because elevated levels are more expensive than the ground level slab-on-grade, which is poured on the ground rather than on a supported framework.
The physical elements of a site also affect costs psf. For example, sloping sites usually require expensive retaining walls, and poor soil conditions result in higher foundation costs. For instance, at the Aquarium of the Pacific parking structure in Long Beach, Calif., a soil stabilization procedure using stone columns was required, which added $1 million in project costs.
Finally, the architectural treatment of the exterior façade — especially common with retail-related structures — significantly can increase the cost per space. The exterior design of Aquarium of the Pacific added almost another $1 million in costs. Typically, the cost for free-standing parking structures ranges from $6,000 to $12,000 per space.
Determining costs for underground parking structures is considerably more complicated. Factors that contribute to the complexity include the extent of shoring; whether or not the parking is located below another use; the location of the water table in relation to the lowest level; and whether or not the “lid” or plaza level above the parking is included in the parking costs.
The amount of wall to be shored, or supported, depends primarily on the site. In some cases, the exterior walls may be far enough from property lines that slope cutting can be used on all sides instead of shoring. In other cases, all walls may be adjacent to property lines and require shoring. The unit cost of shoring depends on soil conditions and depth of excavation, and normally ranges from $25 psf to $40 psf of wall area.
If the underground parking is part of a free-standing parking structure with no uses above, the same long-span structural system can be carried below grade with no penalty in parking layout efficiency. However, if other uses are above the underground parking, their structural systems are carried down through the parking levels, and layout efficiency may be compromised. For example, if the columns are spaced 32 feet apart and code-required space width is 8 feet, 6 inches, only three spaces can be placed between columns, resulting in a 25 percent penalty.
If parking is placed below a plaza or park with heavy landscape loads, a short-span structural system may be necessary. But in this case, the parking layout can dictate the location of columns rather than the building above, and the efficiency penalty is closer to 15 percent.
Other efficiency penalties include losses for elevators, mechanical rooms, and electrical rooms that serve the above-ground uses but are located in the parking facility.
In addition, the grade-level or plaza-level structural cost must be allocated either to the parking garage or to the building above. This cost would not occur if the two uses were built side-by-side and the top parking level was open to the sky.
The cost of the grade-level slab also is higher than the cost of a typical parking level because it supports added dead loads such as paving or landscaping, plus higher live loads than parking re-quires. The incremental increase in cost over normal parking levels usually ranges from $6 psf to $10 psf for the structural support alone. Paving or landscaping are in addition to structural costs.
Another factor to consider is the location of the water table — the level below which the ground is saturated with water. If the water table is above the bottom of the foundation, additional costs will be incurred during construction.
If the structure gets deep enough into water, the walls and grade slab must be designed for hydrostatic pressures, and, in some cases, additional structure weight must be provided to prevent floating. These measures can add significantly to structure cost.
Normally, the cost per space can be approximated by multiplying area per space by the average cost psf. However, in the case of underground facilities, the cost of the grade-level deck, which provides no parking spaces, also must be taken into consideration. The cost psf of the lowest level is calculated by including the slab-on-grade, foundations, exterior walls, ventilation, fire sprinklers, excavation, and shoring costs, in addition to the normal lighting, signage, painting, stairs, and elevators for that level. Costs for this level normally range from $22 psf to $30 psf, depending on factors such as the location and soil conditions.
The cost of the typical underground parking level is calculated in a similar manner, using the cost of the elevated beam-and-slab system in lieu of the slab-on-grade. This level normally ranges from $38 psf to $46 psf, depending on factors such as the location and soil conditions.
The cost of the grade-level, or plaza level, slab is calculated using only the structural cost of the beam-and-slab system and any improvements above it. Structural costs of this level could range from $30 psf to $45 psf.
When developing a parking structure, the end users' needs must be considered. One need is convenience. Parking standards are the combination of space width, parking-bay width, and parking angle, which determine how easy it is to maneuver a car in and out of a space. More generous standards mean more area per space, which equates to a higher construction cost per space.
Generally, more convenient standards are used in structures serving retail or entertainment facilities, where repeat business is important and customers should not have a negative parking experience. Tighter standards can be used for employee parking where drivers get accustomed to using the facility and turnover basically is one time per day.
Interior appearance also is especially important for retail or entertainment parking structures. Good lighting levels and a painted interior are the biggest contributors to a nice appearance, and more importantly, to a perception of a secure environment. Customers likely will not return to a structure where they don't feel safe. Open stairs and lobbies and glass-backed elevators also help create an attractive interior and increase the perception of a secure environment.
Finally, a logical parking search pattern through the vertical circulation system is a key consideration. Equally important is an expedient exit path that avoids congestion with incoming traffic.