For those making a return to the office soon, now in the age of COVID and the Delta variant, having a car to drive to and from work in a controlled, private space is a luxury.
But what’s even more luxurious is having a secure parking space to put that car in — indefinitely. That’s where car condos come in. A car condo is exactly what it sounds like: a condominium for cars. Rather than renting space in a crowded parking garage, car owners can buy a dedicated space where the car is stored, and rent it out when they’re not using it.
In Manhattan in particular, as many in the city prepare to return to in-person work this fall, having a designated place in which to park their car for the long-term is a value proposition that some garage operators and investors are betting on.
Limited inventory and growing demand
Parking management firm Centerpark recently converted a 75-space Upper East Side parking garage on 69th Street into a car condominium with 23 parking spaces for sale for up to $350,000 each.
Kirsten Jordan, team leader of the Kirsten Jordan Team at Douglas Elliman and listing agent for the units, said she believes car condos are the future of parking in Manhattan because outdoor dining has resulted in restaurants taking over parking spaces, and many city dwellers bought cars during the pandemic.
“I think this is really the future of how people are going to want to set up their parking situation,” Jordan told Inman.
Weekday subway ridership in New York City has declined 54 percent from pre-pandemic times, according to data published in mid-July from the Partnership for New York City. In addition, new vehicle registrations in Manhattan rose 27 percent in 2020, according to data from New York State’s Department of Motor Vehicles, a figure the city’s already on track to surpass in 2021.
Centerpark Chief Executive Officer Gregg Reuben told Bloomberg and confirmed to Inman that outdoor dining development as a result of the pandemic reduced the number of street parking spots in the city by as much as 10,000 spots in 2020. As a result of that and other factors leading to more drivers and less available parking, garages that offer monthly rentals have been able to hike up their prices.
Jonathan Miller, president and CEO of real estate appraisal firm Miller Samuel Inc. told Inman that the average price per square foot of parking spots at condos and co-ops has increased 51 percent in the last year. With demand being what it is, and places like Centerpark offering a product that’s now available to anyone — not just someone who already owns a residential condo at a specific building, as is often the case with parking space ownership opportunities — Miller said he could see prices rising further in upcoming years.
“Most of the time parking spaces that are sold in Manhattan are associated with an apartment,” Miller said. “They have a separate block and lot number, but they’re generally part of the package. So this is something that’s going beyond that and it’s an entire garage that’s dedicated to condo owners as opposed to public parking.”
“I do see upside [growth in the future] because parking is a limited commodity in Manhattan,” he added.
Jordan elaborated that from what she’s heard among clients and others who work in the city, is that many workplaces are planning a return to the office around September 1 or after Labor Day. At that point, she said, parking spaces will really see a surge in demand, ushering some drivers to look into condo parking options.
“In two to three weeks, I think we’ll see the demand go up considerably,” Jordan said.
Reuben argued to Inman that owning and renting out a parking space can even be a better investment than renting out residential real estate. He noted that the average price per square foot of a Manhattan apartment during the second quarter was $1,921, compared to the average rent price per square foot of $66, yielding a 3.4 percent capitalization rate (not including taxes, maintenance charges, etc.). An individual condo parking space, on the other hand, costs $272,000, and can earn an average rental income of $13,600, yielding a 5 percent capitalization rate. It also requires a lot less babysitting and maintenance than a residential property.
According to Jordan, individual investors are already showing some cautious interest, but institutional investors in the area are very enthusiastic.
“What’s happening right now is, I think [individual] investors will need to see parking space rental rates come up, which it will happen, and is happening across the city, before the numbers start to make more sense [to them],” Jordan told Inman. “The most interest we’re seeing is from institutional investors.”
These are investors, he explained, that typically have a business in an area where parking is becoming a real problem. They likely already have some on-site or nearby parking, and now see the value in adding something offsite for the people using their services.
Reuben also told Inman that multiple prospective buyers “who are solely interested in parking as an investment” have approached him about purchasing multiple spaces.
“We’re getting people that are looking at this just from an investment perspective, who kind of see what we see, that in many ways, it’s even better than owning an apartment in New York,” Reuben said.
Amenities that increase value
The car condos at 69th Street offer a bit more than the typical parking garage.
All parking spaces are equipped with electrical outlets and have dividers between spaces to avoid door dings from a neighboring car. They can also be outfitted with electrical vehicle chargers, and owners can opt for concierge services that include car washing services or transportation of a vehicle to or from the dealership to be serviced.
What’s more, is that condominium owners at the lot also receive a free parking pass to park at any of Centerpark’s other garages. Since the facility is also a self-park garage, owners can go in and out of the garage at their leisure without having to operate on someone else’s schedule, or interact with other people.
“For people who are looking for a higher level of convenience whereby they have unfettered access to their vehicle, they have the ability to rent that space when they’re not using it, and derive and collect the income and revenue associated with that, and not have any security or sanitation concerns with other people being in their vehicle. That value proposition appeals to many people,” Reuben said.
Centerpark certainly didn’t invent the car condo. Such parking space ownership opportunities have been available in other tight cities with limited parking availability, like Washington, D.C., and Boston, for a few years. But, it’s been pretty uncommon in New York City.
But now with demand increasing in Manhattan, and with the kinds of amenities Centerpark is able to offer to differentiate themselves from other parking options, Reuben feels confident about the future of condo parking.
Currently, Centerpark owns 17 garages in Manhattan, and the company has already designated two more of those garages to become condominiums. With all the paperwork involved, he said that process usually takes about 18 months or so.
“We really turn [these garages] into car dealership showrooms, is probably the closest comparison,” Reuben said. “They’re very, very high-end facilities.”