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From History to Tomorrow: Navigating the Evolution of the Parking Industry

Importance of Historical Knowledge

From past articles I’ve written, it’s obvious that I was a history major and that I strongly believe that an in-depth knowledge of the history of your company or industry is key to charting a successful course for the future. As I look at the direction the parking industry is headed, it is clear to me that there are elements of each of the past disciplines embedded in our ability to mold the future industry.

A New Generation Takes the Helm

The future of our industry is now in the hands of a group of intelligent, ambitious, well-educated young men and women.

Post-War Downtown Development

Downtowns began to mature and take shape during the post-war era between the 1950s and 1970s. During that time, they grew into the government, banking, and shopping center hubs of the community. This economic growth brought huge numbers of employees and visitors into the downtown hub. This growth, along with the tremendous growth in the number of automobiles and the demand for the private automobile, changed the shape of life in downtown American. As the downtown grew, demand for parking grew at an equal rate.

Where We Were/Where We Came From

Prior to the post-WWII explosion in growth, the downtown of the late 19th and early 20th century was made up of family-owned businesses located in two- or three-level wooden structures that could not support the new growth or the parking demands that accompanied it. Older buildings were left empty or razed, leaving a vacant lot. The family who owned the land may no longer have income from the property, but soon learned it could be leased in an amount that would cover the cost of property taxes and insurance until a developer came along to purchase the land to build a high-rise.

Pure Risk

Parking operators were happy to meet this need, as it also met their needs. To be a successful parking operator, you were required to find the land, determine the cost of demolition, determine the cost of improvements such as creating a level surface, paving, wheel stops, curbs, putting in a booth, electricity, and determining the cost of labor and other costs required to operate the parking facility. It was then necessary for you to determine the number of cars that MIGHT park on your facility and what the correct rate would be. Finally, you, the parking operator, had to negotiate with the landowner how much rent you were willing to pay. Rent could be anywhere from $5,000 up to $400,000 per month (the largest one I ever did) for a guaranteed 5 years plus a 5-year option.

Concession Agreements

During this same period, airports and municipalities were operated as concession agreements. (Today, they are almost exclusively management agreements.) The basis of the concession’s agreement was a percentage split. The parking operator would guarantee to collect the revenue and operate the facility, plus make a profit from a percentage of gross revenue. In a typical airport agreement, the operator would keep 2 percent and sometimes up to 5 percent of the gross revenue and for that they would pay all the costs of operating the parking for the airport or city. The numbers for this type of operation were in the tens of millions of dollars, so there was no room for messing up even a half of a percent on the revenue split. You had better know your numbers.

High Risk and Responsibility

During this period of the parking industry, the parking manager assumed all risk for expenses, rates, rent, maintenance, and the demand in a market. You knew your numbers, or you failed.

Where We Are/From the Streets to Building Relationships

The modern era of parking started in the mid-70s and has lasted through 2020. The rise of regional shopping malls in the 70s took a large percentage of the downtown transient parking demand and moved it out of downtown. This one development caused a substantial reduction in cars coming into downtown and caused a large decrease in revenue. Another notable change occurred when a major parking operator made the commitment to become the largest parking company in the world. Imagine the challenge when you realize that to accomplish your goal, you’ll have to search the entire country to find, hire, and train new managers how to take all the risk discussed earlier and put millions and millions of company money on the line.

Transition to Management Agreements

The decision was made that it was just not possible to hire and train that level of expertise, so the answer was to convert from lease to management agreements. In a management agreement, the parking operator bids a fee to manage the property and the expenses are passed through to the owner or property management company. There is no risk to the parking operator.

Shift in Managerial Focus

At that point in time, the demands and requirements of the new era parking manager changed from a true “On the Streets” manager required to take tremendous risk, to a relationship manager with no risk. Without risk in revenue production or expenses, the parking companies have no incentive in demanding products more capable of managing transactions and revenue flow.

Where We Are Going/Information and Technology

I refuse to write about the future of parking because I have learned many times over the years that it is impossible to see more than 5 years into the future. From here we are just going to open the door and peak into the future. Beginning in 2010 we began to see the early attempts to move the industry into a future with less people, no cash, and improved reliance on the use of technology. I am reluctant to use the term “technology” because it is so misunderstood, but we are going to define it and use it because getting the definition right is becoming very important.

Embracing Technology

One of the defining characteristics of the new parking manager is one who understands how to use and mold technology to accomplish management goals. Technology is nothing but a tool and the successful managers learn how to use and manage it like the managers of the 60s learned how to manage risk. The future parking manager will be the one who learns how to manage information and use it to tell the story of operations for the customer.

The Touchless Era

We are obviously moving into an era of touchless and online purchase, but we are still in the very early stages of that development.

Excitement for the Future

Coming from someone who started in the 70s during the high-risk time and moved through the no-risk relationship era, this new era of parking is the most exciting time I have ever been a part of. We have so many new people now coming into the industry, and we have a total obligation to use every resource at our disposal to guide and encourage them.

A New Generation of Leaders

The future of our industry is now in the hands of a group of intelligent, ambitious, well-educated young men and women who are starting their own companies and developing parking technology that is taking the industry by storm! They are a new generation of risk-takers to match those parking managers of the 60s and 70s. I am so excited for you and for our future. We are counting on you.

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