In today’s world, nearly every company is a technology company. That trend is changing the way we do business and interact with one another. Ted Anglyn, president of the Parking Property Advisors, summarizes how these changes are impacting space utilization, which in turn affects parking needs:
The space per square foot per employee in newly leased office space decreased from a range of 300 to 350 square feet per person in 2005 to 150 to 200 square feet in 2010.
Katie Zachrich, CBRE
Some of this space reduction is linked to the recession, but much of it is because of open office design and the predominance of electronic storage, which reduces the need for physical file storage. This change has the potential to increase the typical office parking ratios that range from three to four spaces per 1,000 square feet to five to six spaces per 1,000 square feet.
This begs the question of how we, as commercial real estate experts, address this gap. Parking, access and location are not new issues, but they are still major factors in today’s real estate environment. Landlords and economic development directors are all striving to address the needs of business today while also looking to future needs.
Suburban solutions
During the 1990s in Columbus, office development migrated, in part, to the suburbs to ease the demand for cheaper, easier and increased parking requirements. Fast forward to current market trends, and you find submarkets such as Dublin addressing parking concerns by completing a major study (“The Legacy Office Competitiveness Report”) to review the current inventory and its ability to meet ever-increasing demands for parking.
The study found that many office buildings were being considered “functionally obsolete,” with parking ratios of four spaces per 1,000 square feet in a suburban marketplace where requests for six or seven per 1,000 is not uncommon.
Potential solutions to adapt these legacy buildings included reworking parking landscapes; revising codes and regulations for setback requirements to create additional parking spaces; creating a mix of uses with complementary parking needs; and facilitating alternative transportation approaches to reduce individual driver demand.
Downtown efforts
The downtown office market was once struggling, attracting only those professionals who needed to be located downtown such as attorneys and lobbyist groups. However, the millennial generation’s integration into the workforce has not only changed how we utilize the space, but it has also created a resurgence of interest in urban environments that are walkable and in close proximity to amenities.
That said, in Columbus we still are operating under the perceived need for our own cars. Downtown is combatting this issue of limited parking options through incentive programs that not only create parking relief, but also leverage resources such as the Columbus Circulator (Central Ohio Transit Authority’s free downtown loop route by bus); Car2Go (a car sharing service); and CoGo Bike Share. Capital Crossroads even offers free door-to-door escort service for those who are walking from their office building to their car.
Some landlords are looking for somewhat temporary solutions based on tenant demand. Miranova Two office tower serves as an example. When CoverMyMeds took over Red Capital’s space, it did so with substantially more people, which created a parking shortage in the attached garage. Without the ability to add parking in the immediate surrounding area, providing a shuttle service helped to push parking farther away.
Developers are also attempting to proactively use parking as a competitive advantage when possible. This can be expensive, but owners such as Bill Schottenstein of Arshot Investment Corp. call it an easy decision. He has been renovating older buildings to fit the needs of new and changing businesses for decades.
An early example was removing a boiler room in the basement of the Beggs Building on Capitol Square to create parking for the changing landscape. Built in 1928, the Beggs building was touted for its high-speed elevators and close proximity to the train station. These qualities were no longer differentiators during a rehab in 1988, so the Schottensteins created a ramp to get cars to the lower level.
Schottenstein credits his time in New York City in the 1970s and 1980s to his strategic priorities and the approach he uses to this day. Later in his career, he took a calculated risk when he added lifts to the 107 S. High St. property garage. He knew that each additional spot could run $30,000 to $35,000. And while he would need to account for maintenance and an operator, $5,000 to $6,000 for a lift would double parking availability. He credits the competitive advantage the parking offered to helping lease the building in 10 months during a challenging market.
Looking ahead
Just as proximity to train stations was key to downtown office users at one point, and the suburbs were once the solution for increased parking needs, things are sure to change again. Columbus continues to position itself well to shifting needs. In June 2016, Columbus beat out 77 other cities to be designated as a smart city by the U.S. Department of Transportation. As a result, Columbus won a $40 million grant from the department to develop intelligent transportation systems and a $10 million grant from Vulcan Inc. and Paul G. Allen Co. to reduce greenhouse gas emissions.
With all the buzz about self-driving vehicles, autonomous cars and smart cities, landlords and developers are doing their best to plan accordingly. The Millennial Tower is a 28-story, mixed-use building planned for Front and Cherry streets in the RiverSouth area. Arshot Investment Corp. is the project developer. Plans call for the ability to stack both smart cars and SUV’s, according to Schottenstein.
While the future of cars, parking lots and garages is unknown, one thing is certain — change. One way developers, inventors and real estate professionals can find success is to not only adapt to change, but to also embrace it.
— By Katie Zachrich, Brokerage Associate, CBRE. This article first appeared in the October 2017 issue of Heartland Real Estate Business magazine.