During the past decade, the world has been dazzled by autonomous vehicles, bitcoin, and a major comeback of AI. Meanwhile, significant changes were happening quietly and rapidly in parking, a massive $100B+ industry here in the US.
Within the past couple of decades, a tremendous amount of data has become available to parking stakeholders through implementing parking access revenue control systems (PARCS). The majority of paid parking (105MM+ spaces) in the US is now covered by digital devices.
Per our estimate, the volume of parking transaction data generated across the US exceeds the total information volume of the US Congress Library in a week!
But most of it wasn't available until the recently. I remember at my first parking trade show, in 2015, no one I spoke to knew what an “API” was. Today, the requirement of “make my parking data available to me via an API however I want it” is standard in RFP's and contracts.
Some of the most competitive parking payment and access control solution providers are the ones that made their API available to their customers the earliest.
So, what does it mean for me?
For those who own and manage parking assets, here are some of my predictions to validate in the coming days, of the biggest changes underway.
1. Demand-based pricing will dominate the parking world
For decades, the pricing of parking inventory has been largely based on competition (off-street) or convention (on-street). This will change significantly as demand-based pricing is finally available and puts your parking data to work.
Parking exhibits the dynamics of fixed, perishable inventory, and constantly varied demand. Pricing is THE most effective lever to alter business results, such as revenue for privately owned parking lots or convenience for city owned on-street spots.
The lack of access to demand data made it extremely difficult for stakeholders to take a true economics (supply-demand equilibrium) approach. It used to be easier to look at Joe’s garage across the street, go fifty cents below, and call it a day.
Even worse goes with on-street parking. Residents hate paying for parking, and every elected government official hates to piss off residents. Resulting in many cities charging below market value for parking assets (only $0.00-$.25/hour in downtown core), resulting in the demand to exceed the supply, and causing major congestion.
It's no longer an effective approach.
The unique market dynamics per locations make it difficult for stakeholders to understand price elasticity and forecast the impact of future price changes.
Automatic Yield Management allows organizations to accurately price inventory based on the demand of the location and increase the frequency of rate changes (~400+ unique pricing levels, updated multiple times per day). It eliminates the need of manual review and allows teams to spend their time elsewhere.
Leading organizations have enabled yield management, and you don’t want to be left sitting on the bench.
Unico Properties, a Seattle based $4.5B commercial real estate company, successfully enabled demand-based pricing for event and monthly parking, and achieved a significant NOI increase.
City of Aspen, a well known tourist destination, successfully reduced congestion by 12.5%, while increasing downtown business volume by 20%.
Leaders in the real estate and parking management world are hesitant to publish what their advantages are, in order to keep their competitive edge. But the truth is, most of them adopted data enabled practices years ago. Without disclosing it to the world, they’ve been quietly boosting the NOI of their parking assets.
Some went to the next level, by integrating data with artificial intelligence to optimize dynamic pricing. Such as:
LaSalle Investment Management, a $59B real estate investment management firm, achieved a 136% YOY online revenue increase at one of their Chicago assets.
VPNE, a leading parking operator in Boston, uplifted asset value by $9.7MM in less than one year by enabling dynamic pricing on its online sales channel.
2. Data will drive operational strategy
For too long, parking management has revolved around cash collecting activities and hospitality/customer service. While this is still important, the expectation is increasing for data-backed decisions and operation strategy. Such as:
What’s the optimal oversell ratio for my monthly parkers in different tenant groups?
How many people should I staff onsite to ensure both the highest consumer satisfaction and the lowest labor cost?
How should the on-street parking hour limits get properly determined in different neighborhoods?
How much inventory should I reserve for nearby events?
When and how should online reservation platforms be leveraged? How much inventory should be allocated and at what price points?
The list goes on.
Asset owners, city council members, and executives in parking management expect the answers to be backed by data, and available in real-time. How come? Because everyone is doing it and it works.
Ryan Holgan, VP of Real Estate at JP Morgan, made it very clear in this 2min video that "At the end of the day - it's all about data. Anyone who is making an investment decision wants to see the data behind it".
Jerry Wiggins, Director of Parking at Ashkenazy says, "I don't need to spend my time with a .csv. Now, I can see in real-time what's going on in DC, Seattle, etc. It makes it a lot easier and helps me use my time better."
"Working with Smarking it quickly became clear that they had the next evolution of data management that we have been looking for to take parking management to the next level." - Gary, EasyPark
Leaders in the industry are not just helping their teams learn a new tool - they are enabling their teams to change the way they think about parking behavior, asset management, how to approach challenges, and uncover opportunities.
Here’s how Nigel, CEO of EasyPark, (operating over 100 parking locations for the City of Vancouver) enabled data-driven management.
3. Parking assets will become a core business component
For years, parking has been treated as an auxiliary service and a non-essential business component in real estate, cities, hotels, airports, hospitals, stadiums, universities, and many other industries. Parking management was segmented from core business concerns, and often overlooked by corporate leadership.
This has drastically changed in recent years.
With the amount of parking data available erupting in the past few years, it became possible for asset owners of large portfolios to get a direct grasp of key KPI’s in real-time. Allowing them to focus on the facilities that need the most attention without losing sight of the entire portfolio.
Additionally, data-driven decisions are prevailing, and actionable insights are uncovered .
The organizational business results get significantly elevated through parking as a very unique assets class/service provided to consumers, with all kinds of invisibility, bureaucracy, and management debt getting cut out of the businesses.
4. Parking management expectations will change
It’s like consumers who order their coffee on the phone when they walk out of the door, and have it ready when they arrive. Executives, managers, clients, all want answers backed by data, now.
People expect their parking data to be centralized, regardless if the parking garage is thousands of miles away or a block down the street, especially for asset owners with large distributed portfolios.
The visibility into the revenue opportunities of parking, in turn, elevated the position of parking as a business component within various organizations. People started to see parking as a hidden gold mine to provide additional upper side in their businesses.
When incremental revenue can be generated through adjusting prices by demand feasibly, no one wants to be left behind. More and more, organizations now have designated management and/or executive positions for parking, from corporations to governments, commercial real estate, cities, and hospitals. This will continue.
So, what’s the catch? Technology adoption is harder than technology itself.
In the next decade, what will impact organizations the most is not necessarily what new gadgets are available, but rather, how are leaders enabling internal behavior change for technology adoption. Are they resistant to the inevitable changes, or are they leaning-in with a data-driven approach?
5. Leaders will focus on technology adoption
Here's what we’ve seen very successful executives who work at the intersection of parking and technology do.
Changes in talent
The success of every business comes down to the people behind it. Many successful commercial real estate, parking management, municipal, airport, and university organizations have made investments in positions that are focused on parking and data-driven parking management:
VP/Director/Head/Manager, Parking Asset/Parking & Mobility
Yield Management Analyst/Specialist
Asset Management Specialist, Parking
Urban Mobility Specialist
These positions are responsible for maximizing the business results of parking by riding the ongoing wave of emerging parking data and software/internet/mobile technologies.
Partner & buy, not build.
While “anyone can do anything”” continues to be undebatable, the most successful organizations instead focus on strategic focal points to enable effective technology adoption instead of trying to build everything on their own.
For parking asset owners and managers, figuring out scalable practices in testing, procurement, training, and performance management, is far more important than figuring out how to build parking software from scratch. The speed of technology innovation is simply too fast to catch by doing it. But by riding it, the business gain from leveraging technology solutions is much higher than building it.
Land on the business results, not the data
Data is just a means to an end. Everything needs to be tied back to the desired business results, may it be P&L, residents/visitors satisfaction, or new business accounts.
Successful organizations start with clear business objectives and ensure those guide all efforts along the way. Having the data is step #1, taking action is step #2, and achieving the desired results is the final step.
For the rest of January, we're offering free one-on-one consultations to help parking stakeholders evaluate their portfolio opportunities. Just grab time on our calendar to get started, or give us a call at 415-483-2587.
We wish you and yours the best in the New Year!
- Dr. Wen Sang, your Silicon Valley Parking Guy