Copyright: David Lawson
Published: Property Week 2007
‘Parking? What has parking got to do with property?’ Gulp. If the head of one of the UK’s top agents doesn’t know, what hope for a mere hack? But parking is at the heart of current planning policies, plays a key role in mixed use regeneration and is a growing force in alternative investment.
The Tories proposed controlling out-of-town supermarkets by forcing them to charge for parking. This was quickly withdrawn with the realisation there were more votes easing capital gains tax, but the spectre still hovers, particularly when the government is so keen on ‘borrowing’ ideas.
Town centre planners have their own agendas, on the one hand demanding multi-storey parks to bring in spenders while on the other restricting on-street waiting to the fury of high street retailers. Rents vary enormously according to accessibility for customers.
This will spread to offices if Nottingham goes ahead with plans for a workplace parking levy, encouraging other centres to follow suite. Developers salivating over the prospect of post-Olympics bargains should also note that parking has been wiped from the agenda.
In this car-obsessed society, parking is at the heart of property values. House prices hinge on car access. For years, newspapers have chortled about parking spaces in London’s West End sold for the equivalent of a provincial semi. Full-page adverts dot the trade press, crying out for rows of garages.
Whole communities are being planned with minimal parking, a trend that will accelerate as ‘eco-towns’ become fashionable. A new generation of tower blocks is already car-free. This will test valuers, as some believe buyers are drawn to this idealised lifestyle while others note that homes are shunned if they can’t offer a resident’s permit.
Retailers have appreciated the impact on commercial property values for decades, ensuring every centre has an obligatory multi-storey [MSC]. Business parks survive entirely on parking – demonstrated in the investigation by Property Week’s David Hatcher earlier this year.
Others are beginning to appreciate the significance as mixed-use development rises up the agenda. Mixing residential, retail and employment is seen as the way to reconstruct our cities in a way that removes transport bottlenecks, improves quality of life and saves the green belt for future generations.
But every scheme creates problems balancing conflicting parking demands of residents, visitors, customers and employees. These schemes inevitably include a supermarket, which have traditionally offered free parking to those put off by lugging bags of groceries onto buses and trains. Now they have to share charged facilities, throwing up innovations such as number-plate sensors and special tokens which take the fees off shoppers’ bills. That sort of expense plays a part in negotiations over rents, again impacting on property values.
Parking is also growing in significance as developers and investors recognize a market gap they have overlooked. Parking is a rich source of cashflow. Matthew Maudling, of Town Centre Parking, a consultancy providing a rare oasis of knowledge in this relatively unexplored sector, says it can provide around 20% of the income produced by shopping centres.
Just replace the word ‘cars’ with ‘beds’ and you might be talking about a hotel - albeit a stripped-down hotel, with no added services like catering and receptionists. But even that is changing, as operators introduce kiosks, valetting and other spin-offs. An MCP is just as much a desirable cash cow as a Hilton or Trust House, and attracting similar attention as alternative investments to low-yielding offices and pressurised shops.
Macquarie Banks’s European Infrastructure Fund bet on this potential by paying close to £800m for National Car Parking Services, a national icon that had already been through the hands of venture capitalists like 3i and Cinven, each passing the parcel and keeping a juicy profit.
But that was just for managing car parks and patrolling miles of yellow lines around the UK. The property had already been sold for around £600m to a perceptive bunch of international investors. Lead partner Delek believes it can double the value by expansion, improvement and replacement.
Pure parking specialists are showing the weight of money turning stained concrete into gold. Grosvenor Estate’s deal with VINCI for 2,000 parking spaces in the giant redevelopment around Liverpool’s Paradise Street was one of the biggest property deals in the UK. Britannia paid more than £1,000 per space for the Jamaica Street car park in Glasgow, and the investment went to La Salle at around 5.75%. Q-Park is rumoured to be bidding more than £11m for a multi-storey in Sheffield.
Parking is big business. Opportunities are limited because local authorities control 85% of parking and land owners rarely see the potential. But councils are seeking partners to revive ageing assets, and landlords are widening heir horizons. Meanwhile investors are realising this is a rich source of revenue in a tougher property world.