Anthony Eskinazi, founder of car-parking app and website JustPark, says it takes only a little bit of tech to turn a dormant piece of land into an income-producing asset
It is fair to say that it has been a rather tumultuous time for the commercial property market. In the weeks following the EU referendum, a degree of panic unsurprisingly spread through the sector. Investor confidence plummeted, we saw the sharpest decline in capital values since 2009 and total returns from commercial property suffered a similar fate.
However, the ship has steadied against the Brexit buffeting. We are now seeing an encouraging amount of overseas investment, property funds are creeping back into favour and office headline rents have been relatively unmoved.
Whether we have entered the initial phases of a recession or weathered the worst of the storm remains to be seen,
but the coming months will undoubtedly be characterised by uncertainty. With commercial property in the grip of a downturn – and worse to come if departing companies drive rents down – alternative sectors are attracting investors’ interest.
One post-referendum opportunity that is becoming increasingly popular is to repurpose empty land as car-parking space, capitalising on the reliably high demand for the service in urban areas.
JustPark is a company that specialises in driving yield from empty real estate in the form of parking revenue, allowing landowners to rapidly turn their vacant sites into income-generating assets. Since the referendum, we have added more than 1,400 new car parks to our previous total of 25,000 locations – an increase of 24% versus pre-referendum levels.
Whereas commercial property is at the mercy of economic ups and downs, the demand for parking is as healthy as ever – and it is increasing as more and more cars take to the road.
A cloud of uncertainty hangs over the property market, but car parks are an asset that can be relied upon to deliver steady returns, and they can prove a lucrative investment in the long run.
With today’s technology, it is remarkably easy to set up a car park in a short space of time at virtually no upfront expense and with minimal overheads.
By automating operations, pricing intelligently and marketing effectively, you can establish a cost-effective and profitable enterprise very quickly – a perfect solution for landowners seeking to monetise dormant real estate while it is sitting empty.
For example, payments and enforcement are two big areas of expense at car parks – by automating them, it is possible to cut costs by about 70%. The technology required to do this can be rapidly installed to transform any plot of land into a fully functioning car park in a matter of days, without the need for sourcing additional labour.
While streamlining operations saves money, pricing intelligently boosts revenues. A flexible pricing system that makes real-time alterations can drive much higher yields. It is just a case of applying the same supply-and-demand principles deployed so effectively by the hotel industry and services such as Uber. This change can be a powerful one, and we have seen it increase revenues by as much as 100% at car parks with previously static tariffs.
Once a car park is set up, it is a case of getting drivers through the gates. At JustPark, we have more than a million registered drivers, which gives us a large and engaged user base as a foundation. But, of course, it is still vital to spread the word locally and attract new customers through offline publicity. With the right marketing, it is possible to fill most car parks swiftly, creating a reliable revenue stream for land that might otherwise go unused.
Alternative property opportunities such as this have been emerging more visibly in the past few years, and I am certain this is an area that will continue to grow. Parking is a favourable alternative for landowners wishing to add income-producing assets to their portfolios.
The Brexit vote may have destabilised the commercial property market, but parking, although not impervious to economic ups and downs, remains a thriving industry. All those cars searching for a space offer a steady source of income that is waiting to be tapped into, providing landowners with a slice of a global market worth more than $50bn (£37.5bn). Parking is big business – and could prove one of the antidotes to property’s post-referendum blues.
Interact with Eskinazi on Twitter using @JustPark