James Cook: We see them every day and every city. And we use them all the time. Just drive in. Take the ticket. Find an open spot and then I'm on my way to a meeting, a restaurant, the theater. Yes, I'm talking about what we in the US call the parking garage. And in the UK, you might call it a car park. Maybe you've wondered are car parks profitable? That's something I wondered too. So, I put that question to our car park expert, Colin Chan.

Colin Chan: It's certainly what we used to call cash cow and to be honest in the right location, they still are.

Like any investment, they have to be in the right location, have to be resilient. But now, more than ever the due diligence around understanding the requirement of that particular mobility hub or parking garage, is definitely something that should be in the forefront of every investors underwrite.

James Cook: The first known multi-story car park was built in London in 1901. And a lot has changed since then. And that gives us a lot to talk about. So today I'm talking with Adam Bidder of Q-Park, along with Colin Chan, who heads up our JLL car park solutions team out of London. A lot has changed with car parks. We've got remote office work in many cities. There's regulations around traffic congestion. We have rideshare apps. We have electric cars. So, what does all of that mean for the modern parking garage?

This is trends and insights. The future of commercial real estate. My name is James Cook, and I am a researcher for JLL.

Adam Bidder: I'm Adam Bidder and I'm Managing Director for Q-Park in UK and Ireland.

Kew Park is based in Maastricht in the Netherlands. We were 25 years old last autumn. And we have expanded across Europe. It started with 17 parking garages, as we call them in Maastricht. Across Europe, we own just under 150 car parks. We're one of the biggest, uh, car parks, parking garages, etc.

So actually, we've seen an increase in stay length on average. We've seen more leisure use, more overnight use, but less office use.

I think within this, what it's allowed us to see is try different things and see what works and what doesn't. For example, within that, somebody who may well have driven into a city center before, they may use public transport, but then they can use a bike to get around the city, they can hire a car for the day and obviously the EV hub element as well.

So, we've set up a number of EV hubs. In the UK alone, we've installed over 400 EV hubs charges of our own.

It's providing that different range of services to customers so that they can choose, and of course it reflects the fact that you go different ways. I drove to Manchester last weekend, the previous weekend, I got the train, and then I'm flying, et cetera. So, it's reflecting the change in society where people want choice. And we want to provide that choice for customers.

Colin Chan: It's also about optimizing the space, right?

It's optimization of an urban asset where, do you need 100 percent of the parking the whole way through the year. The goal is to provide a centralized location where people can easily transition between different modes of transport. Promoting that kind of sustainability effort, EV charging, EV hubs means that you can be more efficient and kind of sustainable as well in terms of that mobility for the urban environment.

Colin Chan. I'm a director in our JLL London office. So, I head up a team called the Car Park Solutions team. It's a advisory and investment team and we look at everything from advisory on understanding the potential performance of the car park to supporting and the kind of investment transaction on the other end.

James Cook: I know there's this trend in Europe anyway, it hasn't really hit the US of having no or low traffic areas kind of in the city center and maybe Colin you can speak to the specifics of that, but does that mean that they're going to take car parks within that core and just say, “Hey, we're going to redevelop these into something else. We don't want car parks at the center. We want to push them to the outskirts.”

Colin Chan: London as a prime example. We're seeing this in different cities across the UK, but the ULEZ zone, so the ultra-low emission zone, it is a kind of stricter, emission standards for a certain allocated area within London. It used to be a more centralized area, but I think it was the back end of last year that actually expanded to all London boroughs. You’ll have this kind of ULEZ restriction where it's not by saying that you can't drive into that space, it's just trying to promote more low emission vehicles. So, whether they are EV electric vehicles themselves where there's no emission or kind of newer models of cars, which have effectively a better, more efficient, and lower polluting output from their cars itself. So, it's not saying that you can't drive in those locations. It is just promoting a more clean environment in that way. We're starting to see other cities across the UK adopt to that. Glasgow, for example, is in Scotland, has recently launched that a certain area within the central Glasgow area. So, we're seeing more and more adopt to that itself. Yeah.

Adam Bidder: There’s actually another one, Colin. I don’t know if you saw this week. It's a very topical question, James, because Birmingham has been in the news this week, looking to remove parking in Birmingham. So basically, they would take out a number of their surface car parks and exactly as you said in terms of redeveloping that might be for hotels, for example, if there's a shortage of hotels, or a whole variety of obviously other uses. So, I guess you go back to your supply and demand.

Somebody contacted me and said, “Oh, what do you think about this? It's terrible, isn't it?” And I went, “no, I think it's absolutely great.” You know, you take away those spaces in the nitty, you repurpose it for something that's going to be more use, because generally there is an oversupply of parking spaces in all the city centers. I was asked to do some speech at a parking conference. And I said, I don't think there'll be another car park built in my lifetime in the UK. Now, it was partly for reaction. And I got it.

I spend more time telling people not to build car parks, then to build them and to focus on improving the existing facilities, repurposing because I think go back to cash cow thing, I think traditionally landlords, when it's a cash cow, because they come to an operator, they say, pay me some rent. They say, okay, there's 1500 pounds of space. They make cash, but the operator doesn't. And I think the operators kind of gone, no more. We're not going to finance your cash. It needs to be equitable.

Colin Chan: In the UK alone, there's 23, 000 car parks across the UK. Eighty percent of those are actually surface car parks. So, what we mean by that is effectively a piece of land that has got lines drawn on them for people to park in, right? Now, going back to Birmingham, which is a city in the Midlands in the UK, the reason why there's so many surface car parks in central Birmingham is because just before the GSC, so in 2007, 2008, there were a lot of in developers that bought up land dotted around central Birmingham to basically develop on right, but then, of course, GFC came along and the question that became was it's not feasible, it's not viable to be developing right now. So, they were effectively guided put a car park on it. And we go back to this cash car element where, yeah, it was absolutely perfect because it was minimal kind of cost. You tarmac you draw the lines on it, you receive an income from it, but then going to COVID, which then really then started seeing the decline in terms of the number of cars going in and it really then put that in the spotlight, excuse the pun. But then now, as Adam rightly says, we're starting to see these brownfield sites, which are now being deemed as greyfield sites to be used as development land, which makes a lot of sense.

I'm pretty sure there's the equivalent in the US where you have parking rights and ultimately what that is, is that you have big, large car parks in the outskirts of the city center. You park your car there and then you commute in via some sort of public transport. And I genuinely do believe that we're starting to see that pattern come back again.

James Cook: So, I want to talk about the future, and for me, I always like to think about technology. My distant memories of the car park was the gentleman sitting in the booth that you would pay as you exited. Obviously, that's not there anymore. What's the cutting edge for technology in today's car parks?

Colin Chan: There's a huge amount when we talk about technology and advanced technology to the parking industry. Like anything else, we're going to see a huge influx of how AI is going to really impact this space, as well. And there's a couple of things I wanted to mention here.

One being the smart cities. How does the car park interact with the wider city? If the enablement of the smart city is being tested or driven in a particular location. So, Cambridge in the UK, is very advanced in this and they're testing this with the wider infrastructure to see how that effectively live controlling of the transport system and understanding where the hotspots are in terms of traffic and congestion is in order to use AI to reduce that. And how does it then feed into the parking facilities across the city itself. So, it's more efficient and it's about how do we navigate the commuters in that way. We've also seen from an infrastructure and in terms of a development point of view some advances there and actually one which is a JLL project over in Boston, where it was a multi-story car park. I believe it was three or four floors above ground in one post office square. So very central Boston area, obviously a huge CBD location with prime office being in that particular area sought after and in this particular case, it was a redevelopment where the car park was effectively redeveloped. They created an underground storage facility where it was the best way I can describe it is if you've ever watched Fast and the Furious Tokyo Drift where you see them in Japan and Tokyo and they're driving up to the car and it's almost like a vending machine or an elevator where they effectively park the car in that lift and then you scan something and it goes away.

What they've done there is something similar. It's a stacking system and ultimately what that is, is that it has 200 spaces within that vending machine, if I want to call it that, and it allows you to be more efficient of being able to roll up with your car, leave it there, the machine itself parks it for you, and then when you come back, you effectively tap in your registration and it'll find that for you and deliver that car back out for you. It's reducing the kind of driving around time to find a space. And also, it reduces the amount of time that the consumer has to be there to do that themselves manually. What it has done in this particular site is it's actually unlocked something like 80,000 square feet of prime office space above it. So, instead of it being just a multi-story car park, it's become a more efficient car park in terms of space, and then using the air space above that, they've developed a 80, 000 square feet worth of prime office space. So, it goes back to that whole point of where you can repurpose, so reposition an asset, it should always be looked at. But if the building itself is old, tired, won't accommodate in terms of viability or feasibility to the repositioning of it, then potentially redevelopment may be a better solution to go down.

James Cook: So, you’ve got a car park. Maybe it's a little long in the tooth. Maybe it needs a new use for the building how do you decide, hey, we want to reposition this. We want to redevelop it. We want to do something new. What's the thought process that goes into that?

Colin Chan: I mean, like with any built environment space, it's always about what is the current use? Is that current use being optimized or actually are we going down a path where potentially that's not required anymore? So, the first and foremost, it's the assessment of whether or not the per performance of the assets in the car park, the per performance of the car park is, is that due to the geography, the location around it, and the kind of evolution of the area around it. So, what I mean by that is, has the central business district moved from A to B, so it's not there anymore, or has the retail kind of promenade, the, the pitch of that location also moved, so therefore meaning that this area has become slightly less sought after for this type of space. So always need to question whether or not that is because of the geography or whether it's just because the operation hasn't been well managed.

So could you bring in a better operator to improve that there is cases where we've seen where that has happened and that has been, you know, the existing use is the right one. But if all those kinds of questions come to actually, we don't need parking here anymore and we can't see it being viable in the future. Could we reposition that particular asset? And repositioning means, can we use the core of that building to then be able to change it into something else? Can we change it into self-storage? Can we change it into create a mobility hub out of it, a leisure space out of it? And there's a lot of questions around that as well, in terms of the loading ability in terms of that asset. So, is the structure sound enough? Can it actually hold on to that new loading that is going to come on to that whenever the stress that's going to take and again, if that's the question of, well, it probably won't work that way, then you need to think about redevelopment, but then you've got to think about planning, you've got to think about , the financing behind it as well. And of course, supply demand and what that new use would be.

One thing to touch upon as well is that we're coming into a generation now where electric vehicles our in our market and electric vehicles themselves tend to be a lot heavier than our traditional vehicles in terms of combustion engine vehicles. To give you an example, you know kind of like a VW or like a family car with, with a combustion engine vehicle, weighs about two and a half tons. Whereas a, a family sized vehicle, a family sized Tesla, for example, can weigh up to four and a half tons. So straight away, there's a question of whether or not this car park is actually even feasible or kind of manage the new weights that's going to have to to consider, in the future

Adam Bidder: I think it is in terms of assessing and repurposing and so on, I think, you know, it's looking at, you have lots of data, particularly with the systems we've installed but the data we've got now is really, really good and we have really good information about the different type of customer, for example, whether it's a leisure, whether it's overnight, whether it's a retail whether it's an office worker, and COVID really helped us with that because as things were opening back open from COVID, we were able to check those touch points, get better data about the profile of customers. What that then allows us is to use that data to say, right, how much of that car park do we think we'll need and how much do we not think we'll And then to reallocate that space. And also working with other partners.

So, a couple of examples for us would be we work with Vanguard, they've done self storage; Harleys Street in London, Chinatown, London, you know, good high profile locations, B2B and B2C. So, it helps support the businesses as well in terms of their growth, in terms of giving them extra capacity, working with the businesses.

So, you can try something out. They fill their storage. We can look at our data and say, look, we think we've got this capacity and then they've expanded. So, both those sites have expanded significantly. Working with the council, Westminster City Council in London, again a couple of sites. There was a Moxon Street with a surface site. There's one broadly, one in Church Street, just off Edgeware Road and again, that by actually saying, look, actually, we can move some of those customers to the other parking facilities that allows you to develop that provide new urban living space, for example, for those redevelopments of those areas.

We can actually move some of those other services, move some of the mobility to other parts in that case towards Queensway, Park Lane area, which frees up that capacity, which then, as I say, it's all back to, you've got an excess supply, so how can you repurpose that for other uses in the city centre, which are far more useful, and repurpose that to be able to create these mobility hubs, so you give customers the choice.

Colin Chan: To that point that's where the value could be for an investor, because. We talk about sweating assets. That's a similar way of doing it. Right. And we're seeing in examples that we're looking at across the UK at the minute where capital values have gone up to three-fold because you're not looking at multi use of this particular car park asset, whether it's, you know, using car park with a self storage operator, a car park with another kind of use within that vicinity. We’re now starting to see how that then to the capital value of the asset itself. so lots to explore, just because generally, most of these car parks are found in the prime locations across our times and cities globally. So, yeah, a lot of opportunity there in terms of just understanding what could that value enhancement be going forward.

James Cook: Well, Colin, Adam doesn't matter where you are in the world. If you've got a car park or here, we call them parking garages. There is an interesting future for this sector. So I'm looking forward to paying attention to what happens in the coming years. Thank you so much for joining me today.

This has been a fascinating conversation.

Colin Chan: Thanks James.

Adam Bidder: James.

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This episode of trends and insights was produced by Bianca Montes.

Our theme music was written and performed by Joel Karachi.