Sure, a parking garage can bring in thousands of dollars per day, but that’s only realized after the garage starts turning a profit. It costs about $50 per square foot – or thousands of dollars per spot — to construct a parking garage in the first place, plus ongoing management, paying staff, scheduled maintenance and upgrades, and the electric bill all need to be paid before a parking garage owners can pay themselves.
Even though the industry produces healthy annual numbers and is even experiencing tremendous growth in certain regions, the future of parking demand is still a bit uncertain. Several evolving factors from ride-sharing programs to electric cars impact the expected revenue a parking garage owner can expect to pull in. That means that a savvy parking garage owner needs to continually work to keep costs down without affecting customer service.
There are many creative ways that parking garage owners can keep their costs down. Here, I highlight some of my favorites due to their ease of access and efficacy:
- Reduce the electric bill – and secure tax breaks – by installing energy-efficient technologies.
Parking garages need ample lighting to safely guide cars and people, so electricity becomes a necessary but exorbitant expense for owners. Incorporating energy-efficient LED lighting has several benefits, including a longer life, which reduces the number of replacements, the elimination of ballasts and an overall reduction in wattage consumed, reducing bills and the cost of supplies by the thousands each year.
Not only do these discounts help reduce parking garage overhead, but they can be used as a tax write-off. The IRS classifies a parking garage as a commercial building, which means it qualifies for certain tax breaks outlined by the Energy Policy Act of 2005. Parking garages placed in service by Dec. 31, 2016 can deduct up to $1.80 per square foot from their taxes if they install energy-efficient systems such as LED lighting.
- Locate funding to help pay for energy-efficient upgrades. Businesses in the United States embrace energy efficiency as the path to reducing their bills and decreasing their impact on the environment. Many government bodies have entered the fray as well, making funding available for business owners who wish to make the switch. In New Jersey, parking garage owners can benefit from financial incentives, rebates, programs and services offered through the Clean Energy Program and ongoing tax breaks such as the Energy Policy Act mentioned above.
- Sell advertising space. Thousands of people pass through the average parking lot each day, so why not convert those blank gray concrete walls into a source of passive income? With little upstart cost, parking garage owners can start selling space – and charge premium rates depending on location – to advertise to a potential body of thousands of commuters, shoppers and tourists every day. Advertising space is currently being sold, or the option is being explored, in Philadelphia, Washington, D.C. and countless other cities across the United States.
- Introduce affordable money-saving technologies. Staffing a garage can be an expensive endeavor. Thankfully, there are many technologies available to help reduce the need for a labor force. In addition to the plethora of apps available to locate and pay for spots, there are affordable self-guided parking systems which can be built right into the garage itself. Space guidance systems use an intuitive red-green LED lighting system to deliver customers directly to available spots, which level guidance systems show customers how many spots are available at a quick glance.
Resourceful and forward-thinking parking garage owners don’t just stay abreast about upcoming trends and changes – they know how to utilize the tools available to them in a way which maximizes their profit. By incorporating the right profit-preserving strategy, garage owners can continue to grow their earnings without raising prices on the consumer.