Why Car Parking Is A Struggling Industry In The U.S.

As the automobile took over America, so did parking lots and parking garages. For decades, they were a booming business, with experts estimating that there are between 700 million and 2 billion parking spaces in America. That's a staggering 2.5 to 7 spots for every registered vehicle. However, only about 10% of those spaces are actually paid for.

But here's the thing: while parking is a lucrative business, it's no longer enough to simply provide parking spaces. Our goal as a company is to offer our clients and customers something more valuable than money – time.

Time is the one thing we all desire but never seem to have enough of. And with competition on the rise and demand declining, the parking industry has been forced to reinvent itself and find new ways to remain relevant in a changing world.

Facing the Challenges

The parking industry faces several challenges, from the decline of brick and mortar retail due to the rise of e-commerce to the decrease in daily commutes to urban areas. These factors have led to a decrease in demand for parking spaces and put pressure on the industry to adapt and evolve.

To stay ahead of the game, parking management companies have had to embrace technological advancements and expand their services. However, these changes require significant investments, making it easier for larger companies with more capital to innovate and differentiate themselves from smaller, local parking management companies.

A Brief History of Parking Lots and Garages

The concept of parking lots and garages came about in the 1920s when the number of cars on American roads started to explode. Before that, there were only 8,000 cars in the United States in 1900, but by 1929, there were 23 million. Early garages were fully enclosed and often looked like ordinary office buildings since vehicles were not as durable in bad weather as they are today.

In 1935, the curbside parking meter was invented, marking the beginning of paid parking. However, even today, the idea of paying for parking remains controversial, with people believing it should be free, even in high-demand cities like New York, where 97% of curb parking spaces are free.

Over time, garages evolved from exclusive private clubs with car elevators and valet services to the open-air garages and ramps we're familiar with today. Politicians heavily invested in parking infrastructure to attract consumers to downtown areas, and many of these garages were family-operated businesses. However, as the industry has become more consolidated and professionalized, parking management companies now offer a range of services to diverse clients, including hospitals, universities, hotels, shopping malls, and office buildings.

Embracing Technological Advances

In recent years, parking management companies have been investing in technology to stay competitive and meet the changing needs of customers. With the rise of smartphones and apps, companies have developed platforms that allow customers to reserve parking spaces ahead of time and pay using their phones. They have also implemented dynamic pricing techniques, where prices change based on demand and time of day.

Furthermore, technological advancements have paved the way for gateless technologies and automatic charging systems, making the parking experience more convenient and friction-free for customers. Companies like SP Plus have been at the forefront of this digital transformation, investing in hardware and software that make parking more accessible and efficient.

Overcoming Challenges and Looking to the Future

Despite the challenges posed by e-commerce, ride-hailing services, and the COVID-19 pandemic, the parking management industry is slowly recovering. Companies had to get creative during the pandemic, offering services like COVID vaccinations and transforming parking facilities into temporary hospital wards. Some companies even sold premium parking spots and provided valet services to generate additional revenue.

Looking ahead, the parking management industry is projected to generate around $144 billion in 2023, marking a 10% increase from pre-pandemic levels in 2019. While demand for parking is declining in some markets, parking management companies are finding innovative ways to monetize the space. For instance, parking garages are becoming hotspots for electric vehicle charging stations, providing an opportunity for further growth and revenue.

As autonomous vehicles become more prevalent, parking garages may transform into mobility hubs, offering storage and services for various types of vehicles. Additionally, companies are exploring partnerships with companies like Whole Foods to deliver packages and even Amazon packages via drones. The future of parking holds exciting possibilities for innovation and expansion.

Conclusion

The parking industry has come a long way since the early days of enclosed garages and curbside parking meters. Parking management companies have faced numerous challenges, from the rise of e-commerce to the impact of the COVID-19 pandemic. However, by embracing technology and offering a range of services, these companies have not only survived but thrived in a rapidly changing world.

The parking industry continues to evolve, with a focus on providing convenience, efficiency, and innovative solutions for customers. As demand for parking declines and the industry adapts to new technologies and mobility solutions, the future looks promising for parking management companies willing to embrace change and stay one step ahead.