LOS ANGELES—Los Angeles, as a city, is (very) slowly moving away from cars. Uber, driverless cars and more public transport are all part of the push for less driving. While we are a long way from bulldozing the freeways, property owners are finding ways to reduce parking or build parking structures that can be converted to new uses in the future. This is true for property owners across product types, from multifamily to retail and office. To find out what property owners are doing to reduce their parking requirements, where this is becoming popular and if it is premature to start talking about a car-free Southern California, we sat down with Henry Finkelstein, a partner at Greenberg Glusker, for an exclusive interview.

GlobeSt.com: Why are property owners looking to reduce parking requirements?

Henry Finkelstein: In a way it's an increasing trend, but I've joked for years that developers feel it's unconstitutional to provide more parking than is legally required. It does make economic sense to feel that way. In most situations, GLA is a revenue source and parking is an expense. Plus, higher parking demand uses, like restaurants, are willing to pay more rent than general retail and office tenants are willing to pay more than industrial tenants. If a landlord can convert a lower value space to a higher value space, that is very appealing. Within the constraints of an existing project, these changes in use can only be accomplished with reduced parking requirements.

With all the upheaval in retail, these adjustments aren't just a matter of chasing the highest rents. In many markets, the only viable replacement for a vacant space is a high parking demand use like movie theatres, schools and health clubs. These alternative uses are often thought too be in the best interests of the project, including the remaining retailers. Often, creating a sense of place is more important than providing ample parking.

GlobeSt.com: What renovations are property owners doing specifically to their
garages?

Finkelstein: Upgrading parking controls and other technology is a big trend. A favorite is to install sensors at each parking space that connect to signage identifying which levels have available parking. Upgrading communications systems between gates and the parking office and increased video monitoring are also popular. So are automated payment systems. Upgrading lighting, paint and graphics to make the space more inviting also helps. Installing video boards to engage customers and generate revenue is becoming more common. The objective is to improve the customer experience while reducing staff costs and enhancing revenue.

Enhancing valet parking with amenities like waiting area lounges and upgraded seating is also a trend. At the same time that efforts are made to enhance the self-parking experience, there is no substitute for personal service. Valet parking can increase capacity and overcome customer resistance to the inconvenience of wayfinding and walking distances in larger structures.

GlobeSt.com: Is it premature to be making these renovations, or is parking demand still prevalent?

Finkelstein: Parking demand is not (yet) decreasing across the board. For some businesses, inadequate or inconvenient parking directly correlates with reduced sales. Those merchants are 100% right to pushback against reduced parking. On the other hand, customer tolerance for tight parking is increasing. Just as they tolerate slow rush-hour traffic, more customers are willing to tolerate parking inconvenience.

Implementing paid parking is becoming feasible in more markets. That's evidence of continuing demand, but it also opens the way to regulating demand. Even if demand is not decreasing, parking control systems and charges are a way to bring demand into line with supply. Where parking is extraordinarily limited or expensive, lower-wage employees can be pushed to mass transit and customers can be enticed to Uber and Lyft.

GlobeSt.com: How can property owners monetize their parking garage space when demand decreases?

Finkelstein: Frankly, I've almost never seen a situation where re-purposing a parking structure is the best economic choice, except for very limited ground floor retail or high value storage in office buildings. If there is excess parking the best choice is usually to add GLA on the project or to offer the surplus spaces (at a good return) to an adjacent owner, or to the public, generally. The term “posted and prevailing rates” is very real in high-density areas. In high demand areas, the best way to monetize unused parking spaces is to simply rent them out. For example, spaces in office complexes near the airport, near the beach and near under-parked restaurants and retail are all earning top dollar. Sometimes this is only, at off-hours, but sometimes it can be 24/7. Storing car dealer inventory can also be very attractive.

GlobeSt.com: Are there particular areas of Southern California where this trend is most present?

Finkelstein: Wherever land is the most expensive, the trend to seek reductions in required parking is greatest and the opportunities to monetize parking assets are most ripe. That said, there's also a trend toward seeking the reduction of required parking in some secondary markets. Older regional malls (except those in the very best locations) can't find enough general retail tenants and need ratio reductions to accommodate the higher parking demand users willing to fill the available space.

GlobeSt.com: Is this a first sign that city's should adapt parking requirements to
changing needs?

Finkelstein: Let's not move too fast. In older urban areas of Southern California, the code-required parking was too low for today's needs and there remain tremendous shortages. Beverly Hills has wisely invested in large quantities of publicly owned parking structures to preserve and enhance their retail base. Other areas, like Westwood Village, have struggling retail, largely because the parking is inadequate.

Inadequate parking causes encroachment onto residential streets, poaching of other owner's parking facilities and environmentally unsound (and mightily inconvenient) hunting for that elusive available space. In most jurisdictions, procedures are already in place for “Shared Parking Study” based reductions in requirements and variances based on tangible proof of special circumstances. In my opinion, across the board reductions are premature.

GlobeSt.com: Why are property owners looking to reduce parking requirements?

GlobeSt.com: What renovations are property owners doing specifically to their
garages?

GlobeSt.com: Is it premature to be making these renovations, or is parking demand still prevalent?

GlobeSt.com: How can property owners monetize their parking garage space when demand decreases?

GlobeSt.com: Are there particular areas of Southern California where this trend is most present?

GlobeSt.com: Is this a first sign that city's should adapt parking requirements to
changing needs?

Instant Insights /

How Property Owners Are Reducing Parking Requirements

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