Thread by @BostonBen5

Everyone loves investing in commercial buildings.... until they have bought a parking garage.

Here are 10 reasons why parking assets are some of the best niche real estate to own.

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1/ Most parking owners do business like it's the 1980's. They take cash, have poor customer service, no idea how to implement technology, and generally are terrible at running at operating a management-intensive asset. Massive opportunity to improve operations Day 1.

2/ There is no such thing as "market rent." Parking investments thrive on daily supply/demand trends; owning & optimizing a parking garage is most similar to the commercial aviation business. You can raise "rents" DAILY if the market supports it.

3/ Market Rents Pt. 2. Most owners don't understand how to optimize revenue. Your garage should NEVER have a full sign. "Overselling" monthly spaces is a massive revenue windfall. I've seen situations where monthly oversell is 120% of available spaces because utilization is 80%

4/ People are a creature of habits. Creating an environment that customers are satisfied & comfortable with creates loyalty. The Avg CLV can be more than $1500. You'd be shocked at how lazy people are. Most won't walk a block for a 20% discount because it's inconvenient.

5/ The vast majority of owners enter into a NNN lease with a 3rd party operator. Sounds great, right? Owners are leaving a TON of meat on the bone. I've seen owners leave $100K-$200K on NOI, unknowingly. $200K @ 6.5% Cap = 3.0MM of lost value!

6/ Parking assets are multi-purpose. Garage & Lot's don't just generate revenue through parkers. Smart operators are generating revenues through mini-storage, validation deals, outdoor retail concepts (e.g., SoulCycle), amazon lockers, PODS, etc.

7/ Highly fragmented market. There are only a handful of groups specializing in buying parking assets (my family being one of them). Institutions don't quite understand the asset class, and there is a long tail of legacy owners. By default, there is limited competition

8/ Parking assets are the least intensive use of land. Most are strategically located & in the path of development. "Urban Farming" is a strategy we love, meaning try to find parking assets with high CF and wait for development to infill. People have made a killing doing this.

9/ Limited CAPEX expenditures. Parking assets don't require constant upkeep of capital expenditures (e.g., new appliances, common areas, etc.) Your customers don't care about the newest modern gadgets; they want a clean, safe, practical place to store their car.

The focus on capital outlays should follow this formula:
Appearance (improve street-level visibility e.g. signage).
Experience (technology for revenue control).
Safety (lighting + painting).

10/ Supply Constrained. Show me a developer that wants to build a new parking garage. Some are required by code, but often they are ancillary to a large project and are not economically viable. Buying parking assets at below replacement cost can be cash-cows.

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Looking forward to providing more insights into the parking real estate.