As workers return to the office, hotels and restaurants reopen, and other businesses start their recovery from the COVID-19 pandemic, many parkers are looking for alternatives to traditional monthly parking products. Parking Advisors has observed a number of recent trends, including:
- Online Sales – Online sales of daily parking have increased over the past several months in many markets, since some workers initially came back to the workplace sporadically or on staggered schedules.
- Monthly Parker Signups – Until recently, monthly parkers were signing up at a slow pace in most markets. However, beginning June 1 there is a clear rebound in monthly parking requests nationwide.
- Special Tenant Requests – Some tenants in Parking Advisors’ Asset Management portfolio have requested discounted monthly parking, often because they continue to expect their employees to be in the office fewer on reduced or staggered schedules.
Based upon data from Parking Advisors’ portfolio assets, more workers choose to buy their parking online now compared to the period leading up to the pandemic, whether it is daily or monthly parking. Parking Advisors has researched options to provide parking facility owners with product and pricing options to offer their tenants that are in line with changing demand trends, and to discuss the technologies required to support these options.
Adapting to the Changing Environment
To respond to this need, Parking Advisors expanded upon our ParkChirp online parking sales platform, which allows parking facilities to list and sell products online without paying high fees or commissions. Among other enhancements, in the past year we have added monthly parking signup and autopay functionality, and have developed full white label capabilities, so web pages or sites can be customized and branded for facilities, owners and parking operators.
On the following pages we discuss additional products and options that can assist parking facilities in welcoming back and accommodating tenants who, for the foreseeable future, do not expect their employees to work traditional Monday through Friday schedules.
Condition #1 – Building tenant pays for their employees’ parking
Option: Monthly Parking “Car Pool”
This option is useful to tenants having a large, static employee base with only a subset of employees parking on a given day. The monthly parking “car pool” product provides a tenant with a specified number of passes but places a limit on the number of those passes that can access the garage at any given time. The property owner charges the tenant a higher monthly parking rate for each vehicle that is allowed access, since the actual garage usage is generally higher than it is with single-user passes. For example, the property owner could provide a tenant having 500 employees with 500 parking passes but limit the number of employees that can use their pass at any given time. Once the tenant reaches its limit the passes are denied entry, and each employee must then park as a daily parker.
- Tenant and Ownership Flexibility – The monthly “car pool” product is an accepted industry practice that allows the facility owner to manage garage occupancy while accommodating the tenants’ needs, using reasonable means to correlate the rate charged to the tenant’s actual usage of the parking facility and its spaces. As a tenant’s parking needs increases, the facility owner can renegotiate a new limit and proportionate rate with the tenant.
- Well Supported Technology – Most parking access control systems can accommodate “car pool” functionality. In some cases, the functionality is included in the standard or base software package.
- Simplified Signup – As tenants return to the office, Parking Advisors’ ParkChirp Monthly Parker functionality accommodates parker signup and payment, eliminating the need for paper forms and email communications. The image below is an example of a monthly parker signup page:
- Software Upgrades – Some parking access control technologies require software upgrades, or the purchase of additional software modules to support this product. Others have the feature but lack a good interface to communicate with parkers once the limit is reached. Therefore, it is possible that tenants or their employees could become frustrated if the limit is frequently reached.
- Company Pay Only – This solution does not address tenants whose employees pay for their parking individually, since the pooling of vehicles is accomplished most efficiently at the tenant group level.
Option: Bill Back Validations
This option is useful for tenants that expect to have wide swings in employee attendance, or expect their parking needs to change significantly over time. Bill Back validations allow tenants’ employees to enter the facility as daily parkers; the employer can provide validation coupons, stickers or other credentials to the employee for use in exiting the facility. At the end of each month, the value of the validation usage is calculated and billed back to the tenant by the parking operator or facility owner.
- Tenant Flexibility – This solution offers flexibility for both the tenant and the facility owner, since the tenant is charged based on actual usage and the changing needs of various tenants can be accommodated by the owner.
- Technology Enabled – Many parking access control technologies have features that enable tenants to validate their parkers through an online portal. These have varying functionality, but they provide additional convenience and functionality for tenants.
- Discounting Ability – If desired, the facility owner can offer a discount to tenants off the posted parking rates. This could include a reduced amount per transaction, a flat discount per month or tiered discounts based on the number of times the tenant’s employees park during the month.
- Collections – Since the parking usage is billed in arrears the following month, accounts receivable and collection issues could develop. Parking Advisors recommends implementing a written agreement that includes late payment penalties and terms that provide the facility owner with the ability to terminate the validation program immediately for delinquent payments.
- Garage Oversubscription – If employee attendance is unusually heavy, the facility could become overloaded and lack sufficient space to meet tenants’ parking needs.
Condition #2 – Building tenant’s employees pay individually for their parking
Option: Validation Packages
This option is useful for tenants’ employees who plan to park multiple times in a month, since a monthly pass does yet not make economic sense. Validation packages allow employees to purchase bundles or packages of validations and still receive a discount off the posted daily rates. For example, a 10-pack of all-day validations can be sold at a dollar or percentage discount. The image below shows an example of a parking facility that sells a large volume of validation packages using the ParkChirp online sales platform at a large facility in downtown Chicago.
- Attractive Economics – This solution requires a “bulk” purchase in exchange for a discount, so the parker is committed to utilizing the facility. However, it is common that some number of the validations are unused or become lost, increasing the effective value of the product to the facility owner.
- Well Supported Technology – Almost all industry standard parking technology solutions have the ability to print and accept coupons or stickers, making it easy to implement this solution.
- Simplified Online Transaction – The ParkChirp platform provides a simple online interface to market and sell the validation packages. The platform can be custom branded or configured to meet the needs of each facility, and includes promo code functionality, so discounts can be specific to each tenant or group.
- Manual Administration – The distribution of parking validation packages can be largely manual, and the process requires employees to physically go to the garage office to pick up their validation packages, or for the garage manager to drop off the validation packages.
- Staffing Requirements – As a result, this solution can be a challenge for facilities that lack onsite parking management.
Option: Online Reservations
This solution is useful for many parker groups. Online reservations allow employees to reserve their parking in advance of their visit, and the facility owner to offer multiple products through an online interface. If a facility owner wishes to provide a tenant’s employees with a discounted rate, a customized promo code can be used to provide discounted parking that is targeted to specific tenants or other groups. This solution is best implemented for parking facilities that have barcode scanners with the proper software integrations; this allows the parker to receive a barcode or QR code along with the reservation receipt. The parker simply scans the receipt to enter and exit the facility.
- Simplified Online Transaction – The solution is simple and easy for customers to understand and use, since it is similar to many other online purchases they make for other goods and services.
- Contactless Garage Entry – If the parking facility is equipped with scanners, there is no need for the parking operator or facility owner to manually distribute coupons or stickers to customers.
- Pricing Flexibility – The solution allows the facility owner to adjust the parking rates or the discount based upon demand and market conditions, and to track usage in real time.
- Cash Flow – Since revenue is collected by credit card at the time of the sale, there is no manual billing or collection of revenue required.
- Simplified Online Solution – Parking Advisors recommends using its ParkChirp platform, which was specifically developed to support this type of transaction and can be customized for a variety of situations. The platform reduces transaction fees by up to 85% and provides customer data to the facility owner.
- High Commissions – Most online sales sites charge significant commissions that can be in excess of 25% of the net parking fee in some markets, and do not provide detailed parker data to the facility owner.
- Incomplete Data – Most online aggregator sites also do not share detailed parker data with the parking operator or facility owner, making it difficult to analyze trends or identify repeat parkers who could be converted to other parking products.
The following strategies can enhance long term asset value while accommodating the needs of tenants as they return to the workplace:
- Communicate with tenants – In talking with parking owners and operators, Parking Advisors has received a key piece of feedback; tenants appreciate communication during these changing times. Explaining the available options can build trust and support higher parking usage and revenue as tenants return to the workplace.
- Reduce third-party commissions – Parking Advisors has observed that sales on high-commission online aggregator sites are increasing. As this occurs, the sales commissions and transaction fees erode a parking facility’s potential revenue and asset value. Parking Advisors recommends proactively offering commission-free options to tenants and their employees; a reduced parking fee charged to a tenant along with reduced transaction fees can result in a “win-win” for the landlord and tenant.
- Consolidate tenants’ parkers – If a tenant’s employees historically have parked in other parking facilities in the submarket, offer a deal to the tenant and consolidate all of their employee parking in the subject parking facility. If possible, obtain a contractual commitment from the tenant in return for a negotiated parking rate.
- Renegotiate unfavorable deal terms – In exchange for offering a discount, Parking Advisors recommends evaluating the terms of the tenant’s lease and identifying any unfavorable terms. For example, if a parking facility was typically full prior to COVID-19 and a tenant has a significant number of reserved spaces, the owner could use this discussion as an opportunity to reduce the tenant’s rights to reserved spaces.
- Actively manage rates – As volumes increase and parkers return to the parking facilities, it is important to actively manage both the rates and inventory. Open spaces should be routinely tracked and documented, and if occupancy begins to increase at a significant pace, then parking rates, and possibly rate structures, can be adjusted accordingly.
Parking Advisors recommends the following to clients in the current business environment:
- Offer products, services and delivery platforms that support pricing flexibility, high customer service levels and convenience to building tenants and other parking customers.
- Identify opportunities to adjust or renegotiate tenant parking lease terms in conjunction with offering tenants discount.
- Communicate actively with tenants, including the reasonable timeframes when discounts will be available if the discounts are intended to be short-term solutions, or if they aren’t committed to in a lease or other contract.