Logistics warehouses are tending to adopt XXL formats due to the evolution of consumption patterns. With more advanced technology, small warehouses are becoming more important for last-mile logistics. In a market where yields are increasingly attractive, the valuation of these assets is of crucial importance.
Located between warehouses and offices, the business premises are mainly dedicated to production and handling activities, occupying up to 80% of their surface area. Their size, which varies considerably, can be used by both local SMEs and international companies.
Long considered unclassifiable, car parks are nevertheless real real estate assets with high yields that investors do not think about. Rental security associated with a low rate of charges remains the main investment criterion. Its location, its configuration and its users are crucial elements for its valuation.
Parkings...!
Long considered unclassifiable, car parks are nevertheless real real estate assets with high yields that investors do not think about. Rental security associated with a low rate of charges remains the main investment criterion. Its location, its configuration and its users are crucial elements for its valuation.
What are the different types of parking lot ?
Parking lots can be classified into several property types, each with specific characteristics and market dynamics:
• Residential Parking Lots: These parking lots are located in residential areas and are intended for residents of apartment buildings or neighborhoods. Often integrated into residential complexes or near apartment buildings. Monthly or annual rental. Stable demand, especially in high-density urban areas where on-street parking is limited. Ex: Underground parking in a residential building, surface parking spaces in apartment complexes.
• Commercial Parking Lots: These parking lots are located near shopping centers, boutiques and other areas of commercial activity. High turnover of users, with high demand during the day and during business hours. Hourly or daily pricing. Often equipped with automated payment systems. Ex: Shopping center parking lot, parking near shopping areas.
• Corporate Car Parks: Car parks intended for use by employees and visitors of companies located in business parks or business parks. Often long-term lease agreements with companies. Mainly used during weekdays and business hours. May include additional services such as car washes. E.g.: Office building car park, dedicated car park at a business park.
• Public Car Parks: These car parks are accessible to the general public and located in high traffic areas such as city centres, train stations and airports. High turnover of vehicles, with hourly or daily pricing. Regular management and maintenance required. High ongoing demand, especially in areas where parking is limited. E.g.: Public car park at a train station, airport car park, municipal car parks in city centres.
• Leisure and Entertainment Car Parks: These car parks are located near leisure facilities such as stadiums, theatres, amusement parks and sports complexes. High demand during events and peak periods. Often charged higher rates during events. May include bus and RV parking. Ex: Stadium parking, amusement park parking.
• Transit Parking: These parking lots are located near public transportation facilities such as subway stations, train stations, and bus stops. Designed for commuters who use public transportation. High demand during peak hours. Often subsidized or partially funded by municipalities. Ex: Train station parking, park and ride.
• Vehicle Rental and Storage Parking: These parking lots are used by car rental or vehicle storage companies. Specific use by vehicle rental companies or owners of multiple cars. May include maintenance and service facilities. Ex: Car rental agency parking, luxury vehicle storage lots.
• Mixed Car Parks: These car parks combine several uses, meeting residential, commercial and public needs. Flexibility in the use of space, with areas dedicated to different types of users. More complex management due to the diversity of users. Ex: Parking of a residential and commercial complex, parking of a multifunctional center.
What attributes characterize the "Parking" asset ?
Investing in parking lots has several distinct advantages. Here are the key attributes that characterize this real estate asset
• Location: Parking lots located near shopping centers, residential areas, offices, transportation hubs (train stations, airports), and recreational facilities (stadiums, theaters) are more attractive. Ease of access for users, including conveniently located entrances and exits and well-maintained access roads, is crucial. Located in areas with high population density or high traffic, thus increasing demand for parking.
• Demand and Utilization: A history of high occupancy rates indicates strong demand and stable profitability. Knowing the types of users (residents, workers, business customers, commuters, visitors) helps to adapt services and rates. Understanding peak usage periods (business hours, weekends, special events) helps to optimize management and revenue.
• Structure and Configuration: Total number of parking spaces available. Greater capacity can offer better economies of scale. Dimensions of parking spaces and aisles. Larger and more well-spaced spaces can attract more users. Presence of facilities such as electric vehicle charging stations, security systems, automated payment equipment, lighting and ventilation management systems.
• Financial Characteristics: Income generated by parking space rentals and expected rate of return. Initial purchase price of the property. Maintenance costs, management fees, costs of additional services (security, cleaning, payment management). Costs related to tenant management and parking operations. Local taxes, condominium fees, utility costs.
• Regulations and Compliance: Compliance with local zoning and land use regulations. Compliance with fire safety, surveillance and accessibility standards for people with reduced mobility. Obtaining the necessary permits for the operation of the parking lot.
• Vacancy Rates: Historical vacancy rate data to assess demand stability. Estimates of future vacancy rates based on market trends. Plans to reduce vacancy rates, such as long-term leases or promotional offers.
• Appreciation Potential: Analysis of local and regional real estate market trends to assess potential for appreciation. Impact of nearby urban development projects on parking lot values. Opportunities for improvements or redevelopments to increase asset value (addition of electric vehicle charging stations, improved security, modernization of payment systems).
• Management and Operations: Direct management by the investor or use of a professional management company. Scope of services offered (security, cleaning, maintenance) to improve the user experience and increase the attractiveness of the parking lot. Use of technology to improve management efficiency and user experience (access management systems, preventive maintenance).
• Risk and Security: Identification of investment risks, including financial, operational and market risks. Security systems in place to protect users and facilities (surveillance cameras, lighting, security personnel). Strategies to ensure business continuity in the event of incidents or disruptions.
• Environmental Assessment: Use of sustainable practices and green technologies, such as renewable energy and water management systems. Obtaining environmental certifications (LEED, HQE) that can increase the attractiveness of the parking lot for environmentally conscious users.
What are investors' expectations ?
Investing in parking lots has many advantages, and several specific criteria attract investors to this type of real estate asset.
• Profitability: Parking lots often offer high gross yields compared to other types of real estate assets, particularly due to the high rental income relative to the acquisition costs.
• Positive Cash Flow: Income generated from parking lot rental income can produce a positive cash flow, even with a relatively modest initial investment.
• Stable Demand: Demand for parking is generally constant, especially in high-density urban areas where parking spaces are limited.
• Low Vacancy Rate: Parking lots often benefit from a lower vacancy rate than residential or commercial properties, thus reducing periods without rental income.
• Low Maintenance: Compared to residential or commercial buildings, parking lots require less maintenance and daily management.
• Simplified Management: The costs associated with managing parking lots are generally low, especially if automated payment and access control systems are in place.
• Simple Leases: Leases for parking lots are often less complex and more flexible than those for residential or commercial properties.
• Reduced Rental Risks: The risks associated with unpaid rent and damage are lower with parking lots, as tenants have minimal interaction with the infrastructure.
• Risk Spreading: Investing in parking lots allows for the diversification of a real estate portfolio, spreading risk across different asset types.
• Stability: Parking lots offer income stability that can offset the volatility of other types of real estate investments.
• Modest Initial Investment: The acquisition costs of parking lots are generally lower than those of residential or commercial real estate, making this investment accessible to a wider range of investors.
• Easy Financing: Banks are often willing to finance the purchase of parking lots, given their low risk and stable returns.
• Long-Term Valuation: The value of parking lots can increase over time, especially in areas where demand for parking is increasing due to urbanization and economic growth.
• Conversion Capability: Parking lots can be converted or redeveloped over the long term for alternative uses, such as garages or storage spaces, thereby increasing their value.
• Adaptability: Parking lots can easily be adapted to meet changing market needs, such as the addition of electric vehicle charging stations.
• Flexible Regulation: Regulations regarding parking lots are often less stringent than those for other types of real estate assets.
• Tax Benefits: Some tax regimes offer specific benefits for investments in parking infrastructure, such as tax deductions on rental income.
What are the main criteria for evaluating parking lots ?
To assess the value of a parking lot, as in other sectors, our team uses methods such as income capitalization and discounted cash flows.
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- See also !
Logistics warehouses
In a market where returns are increasingly attractive, with more advanced technology, small warehouses are gaining importance for last-mile logistics....
Business premises
Located between the warehouses and the offices, the business premises are mainly dedicated to production and handling activities, used by both local SMEs and international companies...
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