Do today’s densifying suburban office parks need less, more or different types of parking?
ASTUTE PARKING analysts face extraordinary conflicts in estimating parking needs today, especially in the suburbs. Conventional suburban office parking standards have typically required more parking than building occupants actually need. But changing business practices are creating office layouts that pack workers closer together, which have the potential to increase demand for parking and, eventually, parking requirements. On the other hand, as more employees work remotely, fewer individuals may use the office, resulting in less demand for parking.
A growing body of research was started by UCLA Professor Donald Shoup, whose book “The High Cost of Free Parking” (APA Planners Press, 2005), showed how municipal regulations have traditionally required too many parking spaces for most developments. Shoup reported that there was little theory in how parking standards were established, and that jurisdictions tended to indiscriminately adopt minimum parking ratios used by other jurisdictions. The result was a self-selected, circular process that is widely believed to have resulted in excessive minimum parking requirements. A parking ratio of three spaces per 1,000 square feet of floor space, low by conventional standards, would require about 1,000 square feet of surface parking for every 1,000 square feet of floor space. In other words, a 100,000-square-foot suburban office building with parking at a 3/1,000 ratio would need to dedicate about 100,000 square feet of land to parking.
Many communities are responding by reducing their parking requirements, or shifting the codes from minimum to maximum requirements, allowing developers to establish appropriate amounts of parking for each project. (See “Smaller Cities Lighten Up on Minimum Parking Requirements,” Development, summer 2016.) Getting the parking right is certainly in the developers’ interest, so why not let them figure it out?
Recent trends favoring open workplaces, however, can increase the density of workers in a building, leading to greater demand for parking. A blog post by Cresa Atlanta, an international real estate advisory firm that exclusively represents tenants, noted that “Two hundred square feet [of workspace] per person (5 [people]/1000 [square feet]) isn’t uncommon – and 5.5/1000 to 6/1000 ratio needs are being seen more and more.” These higher employee/square footage ratios “used to be found mostly [among] large space users such as insurance claims, data processing and call centers with high space costs and lower-cost workers.”
While the trend toward collaborative working environments and denser workspaces may be great for teamwork and keeping office space costs down, “it’s a nightmare for parking,” the blog post continued, “the next black hole for tenants and a new matrix for brokers to track; … it’s a ‘rock and a hard place’ situation” for both landlords and tenants. While some workplaces now provide as little as 125 square feet per employee, existing buildings still provide only three or four parking spaces per 1,000 square feet. That is putting pressure on parking.
Kevin Cantley, president of the design and planning firm Cooper Carry as well as a member of NAIOP’s Urban Redevelopment National Forum, says that existing office properties are being repurposed, “with parking ratios going from three per 1,000 square feet to 4.5/1,000, which can be accommodated for now.”
What should developers and property owners do in such unsettled times? In the short term, they must do what is necessary to “make things work,” selectively adding some parking where needed, while also mitigating the increased demand to the extent possible through aggressive programs to get workers to leave their cars behind.
Parking for the first four buildings at TD Bank’s Greenville, South Carolina, corporate campus, can be accommodated in surface lots. (See plan above.) Eventual buildout of 1 million square feet will require four parking garages (PD-A through PD-D in the plan above).
Capitalize on Accessible Locations
The simplest fix is to take advantage of accessible locations, especially those that are overparked by current standards. Parking can be downsized in these locations to meet actual needs. Two projects demonstrate how this can be done.
Industry, an office development with over 152,000 square feet of shared office space, amenities and three restaurants, is located in Denver’s River North (RiNo) neighborhood. Industry bills itself as the nexus of creativity and technology in downtown Denver, and anchors the revitalization of RiNo’s Brighton corridor.
According to Carl Koelbel, vice president of Koelbel and Co., the Denver-based real estate firm that was the original development partner, “We are making it work with only 2.8 spaces per 1,000 [square feet of office space] — although it would be nice to have three — because [the project is attracting] tenants with many millennial [employees] willing to bike, walk, or use Uber, car share or transit.”
Tysons, the suburban activity center previously known as Tysons Corner, in Washington’s Virginia suburbs, is one of the largest and most financially successful suburban centers in the U.S. Developed as a classic “edge city” of malls and office parks, its insular feel and almost complete dependency on the car have made it the butt of planners’ criticisms. The arrival of Metrorail service in 2014 created an opportunity for Fairfax County to promote denser redevelopment around four new transit stations. At the time, the area was home to 167,000 parking spaces, using more land for parking (40 million square feet) than for offices (28 million square feet).
Aggressive new county parking standards for the area will result in significant downsizing of parking requirements for new development near transit. New office buildings will rise on many of these parking lots. Planning staff considered the issue of whether the limited parking requirements were appropriate for the new, denser collaborative offices, but ultimately decided that their impacts did not yet appear significant enough to further change the parking codes.
The Georgelas Group is developing a 3.8 million-square-foot, seven-tower mixed-use project known as Springhill Station on a 17-acre site adjacent to a Metro station in Tysons. Aaron Georgelas, managing partner, says “We are seeing excess parking in our existing buildings, a result of the soft office market and the appeal of the new transit line. We are able to justify lower parking ratios because residents and businesses are selecting the location because of Metro.”
Manage the Commute To Reduce Driving
Programs to actively manage employees’ commutes by expanding alternatives to driving have been around since the 1970s. Transportation management associations originally required by regulations that aimed to reduce the impact of development in fast-growing areas typically offer carpool matching services to businesses and their workers; provide assistance in identifying good pedestrian, bicycling and transit options; and advocate for the expansion of such services. The city of Mountain View, California advocates these types of transportation demand management (TDM) strategies. They have led to downsized parking requirements, which are currently 2.7 spaces per 1,000 square feet of office space. Jeffrey Tumlin, a principal and director of strategy with transportation consultant Nelson/Nygaard’s San Francisco office, says “Even in the suburbs, we rarely recommend ratios above 2/1,000; it’s almost always cheaper to invest in demand reduction rather than supply increase at about this [parking ratio] level.”
Provide Selective Additional Parking
When existing or prospective tenants say they need additional parking, it helps to have a little flexibility. But property owners should also be willing to walk away from a deal if the tenant insists it needs more parking than the owner can reasonably provide.
Michael Dardick, founder and CEO of Granite Properties, a Dallas-based developer with commercial properties in Dallas, Houston, Denver, Los Angeles and Atlanta, says “We have generally found this to be a way overblown issue,” although he acknowledges that Granite’s properties do not cater to high-density users such as call centers. “We have brokers regularly tell us their clients need 5/1,000. However, we have many full buildings, and we have done parking studies over three months at many different buildings. Generally, the parking utilized is below 3/1,000.” Dardick adds that “while customers are creating more density in their spaces, we believe diversity is also way up, meaning you could oversell parking because of flex time, business travel, personal travel, time out selling, sickness, etc.”
Koelbel notes that in Denver, while “the potential increase in parking as a result of shrinking office space per employee is currently a hot topic, no one has had to expand parking yet in this market.” For a master-planned development called Centennial Valley in the Denver suburb of Louisville, “we parked the buildings at 4.25/1,000 square feet when they were built in the early 2000s. Now we are seeing traditional office users ask for ratios of 5/1,000 and some asking for upwards of 6 to 7/1,000. A tenant with a number of engineers and tech employees that was looking to expand was asking for 10 spaces/1,000 square feet rather than its existing 4.5/1,000.
“We could not do that,” Koelbel said, “but we have been putting in flex office space parked at 5:1,000. It works because some tenants want a lot more, but half are OK with 4/1,000. We won’t give tenants a ratio higher than the building is [currently] parked, but are looking at other ways to meet demand, and we’re parking new office projects accordingly. The existing office stock that we are competing against is all parked in the range of 4 to 4.5/1,000, forcing tenants to settle for a lower parking ratio than they may want and asking their employees to find alternative parking solutions or means of transportation. We are currently working with the city to redesign the existing four-lane road through the office park into a two-lane road with on-street parking to help meet demand.”
State Farm Insurance Co.’s new 2.2 million-square-foot corporate facility
currently under construction in the north Atlanta suburb of Dunwoody, Georgia, is being directly connected to the Dunwoody Station of MARTA, Atlanta’s rail transit system. The station is being expanded to accommodate State Farm employees and other pedestrians. On-site parking for State Farm employees will be provided at a ratio of 3.7 cars/1,000 square feet.
When does adding structured parking to a suburban office park make sense? In special situations, plan limitations or environmental concerns may require that the additional parking be built in a structure. Mary Smith, senior vice president and director of parking consulting for Walker Parking Consultants, estimates that the crossover point, when the land is so expensive that structured parking is more economical than surface parking, is about $55/square foot of land, or $2.4 million per acre, assuming the cost of building a structured parking space is about $15,000, compared to about $5,000 for a surface space. When Nelson/Nygaard evaluated biotech giant Genentech’s aggressive plans to increase employee headcount at its South San Francisco headquarters, the consultant determined that it would be more effective for Genentech to invest in TDM services than to build planned parking structures.
Cooper Carry’s Cantley has dealt frequently with this issue, and acknowledges that “a parking crunch exists, especially in buildings not in walkable, transit accessible locations.” He adds that “The only places
where we have seen structured parking added is for corporate buildings, which can handle the cost.”
Leading parking consultants advocate the sharing of parking among different uses in mixed-use properties and districts. This can be an excellent way to balance out parking use peaks occurring at different times, days and seasons. Office parking peaks during the day on weekdays, for example, while retail parking peaks on weekends, and hotel parking peaks on weekday evenings and empties out during the day.
Christopher DeLorenzo, executive vice president, leasing, for Mack Cali Realty Corp., a publicly traded real estate investment trust with holdings throughout the Northeast and New Jersey, acknowledges this trend, and notes that “We’re acquiring better product in mass-transit locations where the demand exists and there is less need for parking. In the suburbs, where we have the capability to introduce a residential component to our office assets, we will. This creates a live, work, play environment, the ability to add some retail, and allows us to add shared parking decks” that are used by office employees during the day and by residents at night.
A Bumpy Road
Cooper Carry’s designers characterize the conundrum faced by developers, designers, planners and traffic engineers in dealing with parking as “a bumpy road.” How much is enough, both for today and for the future? Immediate decisions require an informed assessment by developers and good communication with potential tenants and buyers. Demands to “give me enough parking to accommodate 10 employees for every 1,000 square feet of space I lease” cannot be met if they require building a parking structure whose cost cannot be supported by the market.
Developers need to “anticipate future trends, and create options that work,” both for now and in the future, according to Ken Hubbard, senior managing director with Hines in New York. This could include repurposing parking structures as future office or residential buildings, but that means greater flexibility, and more costly development, up front.
It is clear that parking, and its impact on the urban form, will change dramatically in the near future, but it is not yet clear exactly how. Developers will need to pay careful attention to trends and opportunities. When faced with demands from tenants for expensive additional parking, developers would be wise to insist on a head count of employees over several days, and/or conduct a parking survey.