Updated: Dec 16, 2019
With Smarking, Unico has transformed their parking operations, resulting in:
• $280,000 increased NOI, beating their goal of $200,000 by 40%
• Maximized asset value through smarter pricing and inventory allocation decisions
• Real-time assessments of garage health, enabling rapid response to issues and opportunities
• Proactive decisions based on strategic understanding of parking dynamics at both a regional and local level
Parking is often an overlooked revenue source within a commercial real estate portfolio. While rent from tenants accounts for the majority of a landowner’s Net Operating Income (NOI) - parking is still a meaningful component, ranging from 5-20% of a property’s NOI in urban settings. Historically, real estate owners have not focused on parking, choosing instead to outsource operations and management to third party operators and occasionally hiring consultants for audits and appraisals. Resulting in real estate owners typically have little insight into the key performance metrics associated with their parking assets.
Many assume that the opportunities for parking revenue growth are limited due to lack of data. Alternatively, by the time monthly statements arrive detailing the garage performance, the information is too general and not timely enough to be actionable. But parking dynamics are changing for a number of reasons. The single-use land development style popular during the second half of 20th century has given way to mixed-use and denser land development. Today’s urban garages service demand from a variety of parker types with increasingly diverse behavior.
Furthermore, advancements in parking technology have created a wealth of parking data available for analysis. Now, more and more commercial real estate firms are hiring dedicated parking managers at the regional and corporate-level to identify opportunities within parking portfolios to maximize parking revenues.
Parking Portfolio Management: Historic and Real-Time Information at Your Fingertips
Unico Properties (“Unico”) is a Seattle-based real estate investment, development, and
management company with properties across the U.S. The company owns upwards of
20 parking facilities across the country and has appointed Vice President Russ Davis to
oversee Unico’s parking assets. Unico typically engages a parking operations company
(“operator”) to manage its parking assets and shares a portion of the profit/loss as part of the agreement. In the past, Davis mainly relied on the operator’s monthly report for updates on each parking facility’s performance status.
"How is the transient demand trending? How do these trends vary by region? Where are we in terms of meeting the monthly and annual budgets? I can easily see these trends in Smarking." - Russ Davis, VP of Operations
In September of 2015, Unico hired Smarking to implement its business intelligence software across their portfolio of parking assets. For Davis, having all of his parking facilities’ real-time and historical performance information is vital to his role. Smarking integrates parking data from various PARCS systems deployed at Unico’s facilities. By incorporating Smarking into his daily routine, Davis can now focus on the facilities that need the most attention without losing sight of the entire portfolio.
"Smarking data’s ability to let me focus on particular days is extremely important. With this data, we were able to make $80,000 above the budget across our Smarking parking portfolio last year." - Russ Davis
Track key performance metrics across the portfolio at a glance
Instead of spending hours going through numerous reports to analyze each facility’s performance, with only a few clicks on the Smarking platform, a portfolio manager like Davis can see all the key performance metrics: real-time occupancy, revenue, transaction volume, per ticket revenue - of all the facilities for any given period of time with year-over-year comparisons. Managers can visualize the facilities by different metrics to prioritize management effort. As Davis said, “Smarking helps me stay on top of all the information”.
Quickly identify abnormalities and take action
Smarking’s real-time data helps a portfolio manager identify abnormal occurrences of occupancy, transaction volume, per transaction value. The manager can then dive into the more detailed metrics or reach out to ground staff to figure out what caused the anomalies and what actions are needed. According to Davis, “once I get an idea of the typical pattern at a garage, it’s easy to identify anything that stands out; from there I can dig deeper”. A portfolio manager can leverage Smarking’s alert feature to automate the real-time monitoring across the portfolio. An incident that would have waited to the end of the month to be communicated to the portfolio manager can be identified and dealt with in the matter of minutes.
Capture portfolio-level trends to drive strategic decisions
Smarking maintains historical parking data and presents them in consistent metrics and visually digestible formats. A regional manager can quickly view historical data to identify major trends across the portfolio. “For example, has monthly parker demand been stable? How is the transient demand trending? How do these trends vary by region? Where are we in terms of meeting the monthly and annual budgets? I can easily see these trends in Smarking.” Davis said. Market trends at the portfolio level help managers evaluate strategic business decisions, such as acquiring new properties in a certain city or sector, or offering an evening discount program at downtown garages.
Granular Data to Maximize Revenue Potential
Many of Unico’s commercial properties are located in downtown areas where a diverse
mix of economic and cultural activities create a dynamic that goes beyond the commercial tenants’ monthly parking. To maximize parking revenue without compromising commercial tenants’ parking experience, the parking manager needs to allocate the inventory and properly price the spaces based on the precise demand patterns of various parker groups. Without sufficient parking usage data, Davis found it difficult to work with operators to make inventory allocation and pricing decisions. Additionally, it wasn't possible to to evaluate the impacts of a decision and make improvements over time.
Smarking Solution Produce Results
With Smarking, Davis has a 360-degree view of the parking usage patterns at all facilities. Now, he can partner with his parking operators to optimize parking inventory allocation and rates, structured on ever-changing market dynamics. Davis urges his operators to use Smarking to drive operational decisions: “When we select
operators to manage our parking facilities, previous experience working with
Smarking is an important parameter”.
Oversell Increase By analyzing occupancy, entry, and exit patterns across all tenants at different time of day and days of the week, Davis increased the oversell ratio at a downtown office garage from 20% to 30%, significantly higher than the prevailing level in the neighborhood. As Davis points out, “Smarking data allows me to figure out how full the garage is at certain hours of the day and when people enter and leave. Even when building tenant occupancy hits 100%, I can still do oversell and be confident that monthly parkers will have spots when they come in.”
Lease spaces to non-tenant to maximize inventory utilization
With access to the parking demand of each tenant, Davis can arrange short-term parking leases during office tenant transitions. “When we had 40,000 square feet of office space vacant, I was able to estimate the number of parking spaces that would become empty and lease them out to non-tenants at a higher market price.” Davis said, “that was a revenue-positive move. So we kept some spaces for non-tenants after the new office tenant moved in.”
Optimize transient and event parking rates to maximize revenue
Different from monthly parking inventory strategy, Davis uses demand-based pricing to maximize transient and event parking revenue. For example, he may raise rates on Thursday, Friday, and Saturday evenings at a downtown garage after observing consistent high parking demand from restaurant and event traffic, or adjust event parking rates based on the attendance of a similar event in the past. “Smarking's ability to let me focus on particular days is extremely important.” Davis said, “with this data, we were able to make $80,000 above the budget across our Smarking parking portfolio last year”.
"When we had a 40,000 square feet office space vacate, I was able to estimate the number of parking spaces that would become empty and lease them out to non-tenants at a higher market price. That was a revenue positive move." - Russ Davis, VP of Operations
Looking to the Future
By partnering with Smarking, Unico not only increased the NOI of its existing parking assets, but also found ways to better serve their tenants and neighbors by servicing more parking demand within their limited parking inventory. But the applications of parking data are not limited to improved asset management. As a developer, Unico plans on leveraging the Smarking occupancy data to make more informed decisions around future parking developments.
"When we select operators to manage our parking facilities, previous experience working with Smarking is an important parameter." - Russ Davis
As more and more cities reduce or eliminate minimum off-street parking requirements, and urban mobility patterns evolve, Unico can think critically around building the right amount of parking, or repurpose excess parking inventory into retail, housing or office assets.
About Unico Properties LLC
Unico Properties is a private real estate firm offering investment, development, management, and sustainability services in emerging markets across the U.S. Founded in 1953, Unico creates innovative, people-focused building experiences through a cadre of subsidiary companies that deliver boutique expertise and institutional execution for its own accounts and select third-party clients. Visit Unico for more information.