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Copyright © LK 2002 All rights reserved
Published in "The Property Valuer", Summer 2002

Articles:

* The Economics of Pay Car Parks
* Car Parking in Towns - A Very Big Challenge Today!
* The Economic Boom in Ireland: Parking Implications
* The Value of a Parking Space
* Cheaper parking on the way?
* Hospital Parking: Cars, Cranes and Confusion
* The Great Shopping Centre Car Park Space Hunt

Introduction

Liam Keilthy is a private consultant specializing in car parking related matters and provides expert services to local authorities, private developers and property owners on all aspects of parking management and layout evaluation. A founder member of the Irish Parking Association, Mr. Keilthy edits that association's newsletter and also the web site www.parkingireland.ie

GROWING DEMAND / CONSTRAINED SUPPLY

  • At the end of 2001 there were 1.3 million private cars registered in the Republic of Ireland, up from less than 800,000 in 1990.

  • Sales of new cars have exceeded 200,000 units pa for three years and this is expected to continue.

  • The NRA forecast that car ownership will increase by 50% in the coming 10 years, from current levels of 350 cars per 1,000 population to between 450 and 500 cars per 1,000 population.

The demand for parking is set to track this growth pattern, with little prospect of any comparable growth in the supply of parking capacity in the major conurbations. This is due to a combination of planning restrictions aimed at curbing traffic congestion and the lack of appropriately located sites. This imbalance is likely to lead to a pattern of increasing parking charges and, by extension, increased values for existing parking spaces.

Looking back over the past ten years it is easy to forget that parking spaces were available to rent or lease in Dublin city centre for €700 to €1,000 pa in the early '90s. At that time, hourly parking charges were less than €1.00. Today the same spaces are costing €2,500 to €3,500 pa to rent and hourly charges are between €2.50 and €3.00 per hour.

MARKET TRENDS

Some recent competitive tenders and public notices help to benchmark valuation exercises in the parking market:

  1. The UK based National Car Parks Ltd recently offered its Irish business for sale, including two long leaseholds at Marlborough St, Dublin (525 spaces) and Grand Parade, Cork (350 spaces) plus one expiring lease at the Setanta Centre, Dublin (225 spaces) and a management contract for the new 400—space Carroll's Quay (350 spaces) in Cork.
  2. This €4 million pa business, generating profits before tax of c €1.3 million, was sold by competitive tender for a reported €30 million. Discounting the management contract, this represents a value of almost €32.000 per space, or 23 times the profit figure for 2000.
  3. Nine spaces sold two years ago in the Baggot St/Leeson St area for a reported €600.000 and a recent advert, in the national press offered a single parking space adjacent to the city centre for sale for €35,000.
  4. The Dutch 'Q Park' paid a reported Stg£36 million in 2001 for the UK Universal Parking business, including 5 leaseholds generating profits of Stg£l .3 million pa.
  5. The US parent of NCR the UK's leading car park business, has sold the company to a venture capital group for Stg£820 million. NCP has over 500 car parks and annual profits in excess of Stg£200.

IRISH MARKET

The Irish car parking market has been estimated to be worth in excess of €250 million pa and growing daily. Dublin City Council generates a reported €14 million pa from its 4,000 metered spaces and related fines and charges. In addition, its three off-street multi-storey car parks (c 2,000 spaces) are reported to generate revenues in excess of €5 million pa. Pay parking in Kilkenny is reported to generate in excess of €1 million pa for the local authority.

RULES OF THUMB

A number of useful 'rules of thumb' can be applied to the likely success of any car park:

  • Proximity to destination/convenience represents 80% of the parking decision

  • Short stay parkers are generally price insensitive and convenience sensitive - they are reluctant to walk more than 200m from their car to their destination

  • Long-stay and commuter parkers are very price sensitive and convenience insensitive

  • Given comparable convenience, parkers prefer surface parking over purpose-built parking, whether multi-storey or underground

  • Typical average occupancy levels in public car parks seldom exceed 60% across a normal year and regularly fall below 50%.

  • Average stays in public car parks range from less than 30 minutes in a local convenience shopping centre to 1.5 hours in a regional centre to 2.5 hours in a national centre e.g. Dublin's Henry St./Grafton St.

In considering the value of anv carpark the critical issue is the attraction of the main traffic magnet, e.g. the anchor tenant in a shopping centre, or the quality of the retailers in the nearest main trading street. This factor will hugely influence the traffic level in the car park and, by extension, the revenues and profits that it can generate.

FUTURE TRENDS

Looking to the future, a number of trends are emerging:

  • Demand for parking spaces is increasing faster than supply, with the result that property owners are under increasing pressure to properly manage parking assets, in many cases having to make rationing decisions.

  • The most effective rationing mechanism is to charge for parking and this is rapidly being accepted by local authorities, churches, hospitals, universities, shopping centres, harbours, hotels, pubs, airports, train and bus stations - in fact anywhere there are accessible parking assets. Have you tried parking anywhere near Shelboume Park Greyhound Stadium in Dublin up to 10 p.m. on any night of the week. save Sunday? Don't, unless you have several euro to spare to pay for the privilege!

  • Control systems being employed include Pay & Display and Vouchers for on-street spaces, and Pay & Display, Pay on Foot, Pay at Exit systems for off-street car parks. Where pay parking poses a challenge to owners, they have implemented warden services to enforce limited-stay parking regimes, e.g. maximum stay of 3 hours.

  • Planning authorities are increasingly requiring developers to submit transport plans for their projects and these have to address demand management issues, including programmes to reduce traffic and parking at sites. Instead of minimum parking standards, many projects arc facing maximum parking standards, which are far below the levels required to cater for the expected demand. If we need any evidence of the fact that the number one target for traffic enforcement is the private motorist, we need look no further than that Dublin City's official 'clampers', who are only now being asked to deal with commercial vehicles that daily transgress our parking laws in a manner that makes the offences of the private motorist pale into insignificance.

A large number of modern multi-storey car parks in Ireland have been developed with the assistance of generous tax incentives, which, amongst other things, included leases at modest rents. These incentives will shortly begin to expire and rents will be reviewed on an open market basis, which should pose some interesting challenges for all involved.

The outlook generally is that car park charges will continue to increase and that values will do likewise.

Where there has historically been free parking, pay parking is likely to be introduced in the next 3-5 years. Managed properly, this transition represents a significant commercial opportunity for property owners, which valuers would be well advised to be aware of.

Liam Keilthy
CEO of Park Rite Limited 1994-2001.
Phone: 1-353-1-2893746 Email: Liam Keilthy

Copyright © LK 2002 All rights reserved
This article is reproduced here with the permission of the author. Copyright remains at all times with the author, and the opinions expressed are his alone.

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