The profits of parking garage operators are being squeezed, and as a result, a growing number of operators are seeking to renegotiate their contracts with co-ops and condominiums. “I’ve seen it with several buildings,” says Andrew Brucker, an attorney at Armstrong Teasdale. A company that operates a garage with 100 spaces might ask to cut its rent from $700,000 a year to $500,000 – a huge discount, Brucker notes.
The reason is simple: demand for parking spaces is dropping. The number of cars that rent parking spaces by the day or the hour in “transient spaces,” a prime profit source for operators, has dropped 10 percent in the past year and a half, according to the Metropolitan Parking Association.
People who used to drive themselves now increasingly rely on ride-share services like Uber and Lyft. The number of taxis and for-hire vehicles registered in New York City has doubled since 2010, reaching more than 100,000 in 2017, according to a report prepared by the city’s Department of Transportation. Meanwhile, the number of vehicles that enter Manhattan south of 60th Street dropped from an average of 776,000 a day in 2010 to 709,000 a day in 2017. It all adds up to fewer drivers looking for short-term parking spaces.
“Revenue is down for parking garages,” says Brucker. “But how much?” He always asks parking companies to show him their books if they want to renegotiate rents. “I have never been successful,” he says. “They don’t want you to see the profit they have made from you over the years.”
Some co-ops and condos have begun operating their own garages. Others, rather than taking over operations, are accepting lower rents. “A reduction in rent is a ‘no-fuss’ solution,” says Brucker. “They don’t want to take the chance.”