For those looking to move into a Manhattan condo or co-op, there are zounds of factors that come into play while searching for the best—and most efficient—place to live. Usually, location, size, and safety are always a concern. Amenities attract buyers and renters, as well, with fitness rooms, pools, and media rooms having an increasing appeal on prospective residents.
Parking is another amenity that is gaining popularity quickly. After all, residents who own cars in Manhattan understand the parking challenges that come with owning property in the most coveted borough; the drama involved in simply finding a space is enough (and costs enough) to make one want to toss their vehicle from the Brooklyn Bridge.
Co-op and condo buildings that offer a parking facility alleviate headaches, guaranteeing residents a place to park vehicles; this convenience offers a financial boon to shareholders and unit owners by providing extra income.
Regardless of whether the facility is underneath the building or adjacent to it, there’s more to running a parking garage than just painting some stripes on the pavement and watching cash roll in. Management, allocation of spaces, and security are just a few of the considerations.
By The Numbers
In New York City, parking rules and regulations are quite different than those in most of the country. Due to the subway system and other underground infrastructures, office buildings are rarely allowed to place parking garages underneath the property (unlike other big cities where the regulations insist that buildings accommodate vehicles of those working inside).
According to the website NY Bits, which assists users with finding their “perfect place to live,” there are approximately 150 condos in Manhattan that offer a garage for parking, with the majority of these in Upper Manhattan.
The city’s Department of City Planning’s (DCP) latest data shows the number of off-street parking spaces in the Big Apple was 102,000 in 2010. With probably triple that number of people looking for spots, and garage prices increasingly astronomical, having a place to park your car is a luxury that for which many people will pay almost anything.
Just how important is parking in New York City? Consider that a new 10-unit building developed by Atlas Capital Group at 42 Crosby Street last year offered residents the chance at one of its 10 underground parking spots…for $1 million each! Directly across the street, a 145-unit Tribeca tower had 28 parking spots at $500,000 a piece.
Just as the expensive Tribeca condo parking garages being developed show, new co-ops and condos being built in the area are taking advantage of the fact that they can build their own private garages.
Condos and co-ops offering parking garages have plenty on their plate: they must run the space properly and fairly to satisfy the residents and make sure that the shareholders get optimal value.
In New York, garage owners have two managerial styles, typically, and each has pros and cons. A building can lease the property, turning over the keys to a parking company and having them run the facility without interference, which provides an agreed-upon cut of the profits to the building; or the building can arrange a management contract, where money is still collected, but with the amount of profit apt to fluctuate from month to month.
While management contracts are more popular in most of the country, that isn’t the case in New York. “Manhattan is kind of unique in that it’s a very lease-oriented market. Outside New York, I would say most facility owners prefer to maintain some control over certain issues,” says Larry Lipman, president of Manhattan Parking Group, a lot-and-garage management company. “They contract a parking management company to run the facility and protect their interests but the parking company would run it according to the parameters established by the ownership.”
The consensus as to why leases are so much more popular in New York: the sheer number of cars that come and go to a garage each day. After all, with a lease, all a building needs to do is collect a check every month, without worrying about anything else.
Contracts with parking managers are different in New York than other parts of the country. Lease contracts tend to be three to five years elsewhere, but in New York 10 to 15 years…though parking companies are flexible, and typically contracts include escape clauses built into contracts if one party is unhappy with the arrangement.
Additionally, a third (and far less popular) way of controlling a garage includes boards and management choosing to run the garage and employ the staff themselves. This might work in a smaller city, but most parking experts say it’s “wishful thinking” in New York.
Running a parking garage isn’t about assigning spaces only; one must consider drive-in ratios, percentage occupancy, spaces allocated to residents, defaults, car problems, employee turnover and more. That’s why an experienced parking management company can run a garage more efficiently and with fewer hassles…and make more money in the process.
Analyzing the Situation
Leon Geoxavier, project manager for Walker Parking Consultants, a nationwide parking consultant with offices in New York, says the company helps buildings analyze the best ways to utilize their parking facilities, plus assists with the construction of new parking garages and in restoring old parking garages.
“I work with co-ops and condos in Manhattan and need to tailor the involvement in every situation,” he says. “There could be a condo in Brooklyn with a self-managed garage, and they own their own parking and manage it themselves. It’s all for residents, and everyone has a key. We will work with their managing agent like any traditional engineering firm that would be hired for repairs or improvements. We will do an analysis and work with owners on what needs to be done.”
For a higher-end condo in Manhattan, the circumstances are normally different because they normally have a parking management operator at the helm.
“The garage is almost like its own entity, so the condo may own it, but they leased it to a parking operator…they come in and do valet, and park the cars, and manage everyone coming in and out,” Geoxavier, who is an architect, says. “In that respect, the operator may have their own people do things, and the building only responsible for some things, like construction repair. That’s what we would be called in for…”
Walker Parking Consultants regularly runs studies that can help a parking garage better manage its financials. According to Geoxavier, the data looks at how much parking a building has to offer, the cost to the customer, and the demand. Also, it makes sure that enough is being saved for maintenance and repairs.
“If a condo is concerned about their parking garage and don’t think they are charging enough to cover the cost of operating the garage, we can do a complete analysis for them,” he says. “Our people do an objective, independent study so a condo and show it’s not just trying to pad the budget.”
Co-op and condo buildings that offer a parking facility not only alleviate parking headaches by guaranteeing residents a place to park their own vehicles, but can also offer a financial boon to shareholders and unit owners by providing extra income.
An on-site parking facility is an asset whatever way you look at it: An owner can control their own destiny by providing parking to their residents, plus they can earn a cash stream that can go back into the condo.
It might seem like a practical idea for Manhattan co-ops to invest in garages and make them their own but they have to follow federal rules, like the IRS Code’s 80/20 rule, which was amended in 2008 to make it less stringent.
Under the revision, co-ops need to pass one of three tests so that shareholders can qualify for tax benefits, including deductions for property taxes and mortgage interest and the right to shield up to $500,000 from capital-gains taxes when an apartment is sold. The original 80-20 rule is one test. The second requires at least 80 percent of a building’s total square footage be available for use for residential purposes by tenant shareholders. And the last is for a co-op to spend at least 90 percent of its total income for the benefit of shareholders. However, most new condo buildings in the city almost always have a parking garage attached to it nowadays.
Developers have learned the importance of finding a parking management company to work with during the construction stage so everything goes smoothly once everything is up and running.
“Anybody today that can have parking to use to attract buyers of condos or co-ops should take advantage of it,” Lipman says. “I think it’s very beneficial to have a garage at the bottom of the building to offer. If the garage is strategically located, you can take in transient parking as well, and it can be a big revenue source for any co-op or condo.”
Let’s face it, cars on the streets of New York are as prevalent as rats under the subway, so the need for parking will always exist. For a New York homeowner to drive home and not have to worry about circling the block a few times or paying expensive prices for the lot down the block—especially in the winter weather—having a parking space as part of your building’s amenities to residents is as valuable as vaulted ceilings or a Central Park view.
Keith Loria is a freelance writer and a frequent contributor to The Cooperator.