Most commercial properties have a parking operation, and most property management teams have nobody responsible for running it. Leasing has a team. Maintenance has a team. Parking has a vendor contract, a rate sheet that was set some years ago, and whoever happens to notice when something breaks.

That arrangement produces predictable results. Revenue leakage, the gap between what should be collected and what actually is, runs 10 to 25 percent at properties without active monitoring. Underpricing costs the average multifamily property around $100,000 a year in missed net operating income. Neither number shows up as a problem on a report because nobody is generating the report.

The labor requirement that once made dedicated parking management expensive has largely been automated away. License plate recognition handles enforcement, mobile payment handles collection, and gateless entry removes the equipment that used to need someone standing near it. That does not mean staffing disappears everywhere. Shareena Sandbrook, Chief Commercial Development Officer at Towne, is careful to distinguish between the properties where automation is the whole answer and the ones where it is not. “The tech has come a long way to help reduce the labor but for some types of parking, particularly healthcare, humans are still a really important touch point,” she said. Someone arriving at a hospital is having a difficult day, and a kiosk is not the right greeting.

Where the technology has moved recently is from executing tasks to finding money. Automation made parking cheaper to run. AI is making it more productive, and Sandbrook describes the shift as the system doing analysis nobody at the property had the capacity to do. “AI not only makes our tech faster, it can now identify opportunities to increase NOI by predicting utilization, pricing suggestions, and competitive analysis,” she said. “There is always some revenue leakage not identified, particularly if there isn’t someone specifically working on managing it.”

Speed is its own revenue lever in some asset classes. A retail center where it takes eight minutes to find a space and exit the garage has converted shopping time into waiting time, and the tenant whose sales suffer is the one paying rent. Reducing friction at entry and exit does not show up on a parking P&L, but it shows up in the center’s performance.

Dynamic pricing has gone from unfamiliar to expected over a relatively short period. Rates that move with demand, time of day, or local conditions once required explaining to every customer who encountered them. “When we first started no one really understood surge pricing, now they are much more used to the idea,” Sandbrook said. Consumer familiarity with variable pricing in ridesharing and travel did most of that work before parking operators had to.

What AI adds is the ability to price against information the property does not generate itself. Local event schedules, competitor rates, weather forecasts, and seasonal patterns all affect what a space is worth on a given afternoon, and a pricing engine that reads those signals can adjust faster than a manager reviewing rates quarterly. The target in most cases is somewhere around 85 to 90 percent utilization, high enough to capture demand without turning away the marginal customer.

Older properties face a real obstacle in getting there, since the equipment and software carry upfront cost against a revenue stream the owner has never counted on. Sandbrook sees third-party arrangements as the way most of those properties end up making the investment, because they let an owner see results before committing capital. “One of the benefits of working with third parties is that they can start to realize the benefits without putting up too much money,” she said. “Once they start to realize what kinds of revenue can be made they usually are ready for more investment.”

The sums involved tend to surprise owners who have treated parking as infrastructure. “The additional revenue could be in the hundreds of thousands of dollars in revenue which, depending on the cap rates could really improve the property’s value,” Sandbrook said. Parking income is typically capitalized somewhere between 5 and 10 percent, so a few hundred thousand dollars of durable annual NOI can move a valuation by millions. That math is available at properties that already have the garage built and the cars already arriving.

Parking is also the first and last thing most people experience at a building, which makes it an operational question regardless of what it earns. The properties doing well on both counts have generally stopped treating it as something to be contracted out and forgotten.

The post Tech Has Turned Parking From a Cost Center to a Revenue Driver appeared first on Propmodo.

​