March 19, 2021
As more and more companies head back to the office, it is so good to see parking lots and decks finally filling back up. Personally, I vow never to complain again about having to drive to a higher level in a deck to find a parking spot! In time, parking may become a thing of the past, and maybe one day we can look back on how important it was in our everyday routines and how much we relied on our cars. But for now, it is an important consideration for tenants and buyers as parking becomes tighter and thus more expensive in many urban environments across the country.
In Downtown Raleigh, prices for parking leveled off due to Covid but, before the pandemic, we saw parking costs escalate steadily since 2014. Several factors contributed to both the rise in cost and low inventory, including the disappearance of many surface lots to make way for new office towers and multifamily projects. Despite the shutdown, many of these development projects continue on-schedule as rezoning requests continue to flood the City of Raleigh Planning and Development Office. Many office projects offer a low parking ratio, 1.5-2.0 per thousand square feet. With the proposed projects getting bigger and no new municipal decks contemplated or under construction, this will certainly continue to strain the parking environment downtown in the years to come.
Currently, parking spaces can lease anywhere from $125-$170 per space per month in Downtown Raleigh. Much of this cost depends on the location of the spaces in the parking deck, reserved vs. unreserved spots, structured parking, or spaces in a dwindling number of surface lots. For companies that pay for 100% of their employee parking, this can add an additional $4-$6 per square foot onto a base rental rate of the office. For employees who pay out-of-pocket for parking, this can be a large expense, and, for some, it may affect whether they work for a particular company or if they want to work downtown at all.
“We have to have four per thousand parking. It’s a must-have and a deal breaker!”
As brokers, we hear this from so many of our clients. With RCR’s 30+ years of experience representing office users, we have developed a process to help tenants determine their true parking needs and help find solutions that drive savings. We analyze company operations and employee needs, and what we have found over the years is that companies tend to use less parking than they think. Vacation and sick leave, business travel, full time vs. part time staff, the increase in work-from-home models, number of visitors, and the number of staff living near an office, are all factors that play into our analysis. With this data, we are then able to structure terms with the Landlords accordingly – negotiating abated spaces, number of spaces, or locking in at a set rate for spaces that a Landlord may control.
For many companies, parking can be a huge problem. But at RCR, we pride ourselves in being problem SOLVERS! Know that we are here to help analyze and guide you through the process so that you can control your costs AND keep your employees happy!