Increased car ownership and decreased street parking are creating the perfect storm for car condos in urban centers. Investors are betting big on car condos as people prepare for in-person work.
Another Lux Add-On in Age of COVID and its Delta Variant – Car Condos
Safe, controlled, private spaces are a luxury in this age of COVID and its Delta variant. Single-family detached homes, private backyards, home-site amenities such as training gyms, swimming pools, and media/movie theaters and now, car condos.
Rather than parking a car in a random, uncontrolled space in a crowded parking garage, car owners can now purchase a dedicated space to park their car and then rent out that space when they’re not using it.
More Drivers
Fewer and fewer people are using public transportation in this age of COVID and the Delta variant. According to the MTA, systemwide ridership on New York’s subways, buses and rail was down an average of -50% per day during the third week in August 2021.
Likewise, by August 2020, New York State had processed +18% or 900,000 more new car registrations in the city than in August 2019, according to The New York Times. By May 2021, according to data from HIS Markit, another 437,548 new car registrations were processed.
New York is not alone here in seeing transportation goals scrambled by the COVID pandemic. According to an analysis from McKinsey & Co.,the ability to reduce the risk of infection was consumers’ number one factor in choosing a transportation mode and “…private car use (is) getting the greatest boost.”
Fewer Parking Spaces
Now factor in all the streets in large metros that were turned over to pedestrians, bikers, and restaurants that took over curb space for outdoor dining. Many cities, pedestrians and bikers want that street space to become permanent just as many cities and restaurants want those outdoor dining spaces on curbs to become permanent.
Permanent outdoor dining spaces might be great for business and great for reducing traffic on city streets but…where do people with their own cars park their cars?
Car Condos Could Be Long-Term Value Proposition
In major city centers such as New York and San Francisco where people are preparing to return to in-person work, some garage operators and investors are betting that having a designated parking place over the long haul is a value proposition.
Centerpark, a parking management firm in Manhattan, recently converted a 75-space parking garage into a car condominium with 23 parking spaces for sale to the tune of $350,000 a space.
Kristen Jordan, team leader of the Kirsten Jordan Team at Douglas Elliman and the listing agent for those 23 parking spaces, told Inman, “I think this is really the future of how people are going to want to set up their parking situation,”
Jonathan Miller, president and CEO of the real estate appraisal firm Miller Samuel, told Inman that the average price/square foot of parking spots associated with a condo/co-op/apartment has gone up a whopping +51%.
Having dedicated parking spots for the public at large opens up those parking spots to a whole new clientele. Miller said, “I do see upside (growth in the future) because parking is a limited commodity in Manhattan (and in other cities such as Washington DC, San Francisco, Santa Monica and Boston that already have car condos).”
Investors Already Showing Interest
Gregg Reuben, Centerpark CEO, told Bloomberg as well as Inman that owning and renting out a parking space can generate more income than renting out residential real estate. Let’s say that an average car condo costs $272,000. That car condo could earn an average annual rental income of $13,600, yielding a 5% capitalization rate without all the babysitting and maintenance required of a residential property.
Jordan with Douglas Elliman is already seeing interest from individual investors but “…institutional investors in the area are the very most enthusiastic.”
Thanks to MTA, Centerpark, Miller Samuel, Douglas Elliman, McKinsey & Co., HIS Markit, The New York Times, Bloomberg and Inman.
