The rising cost of parking
In the last decade or so the price of a Calgary parking spot has increased by 233%, according to Colliers international. Toronto prices have gone up 130%. The median price for a monthly spot in downtown Calgary today is $453, and Toronto is $336. But relative to other urban areas around the world it’s not so bad. Parking in London’s city center for example costs $933 (U.S) a month. Hong Kong is $745, Tokyo ($654) and Zurich ($605)
“The reason prices keep going up really comes down to limited supply,” said Wayne Duong, director of research with Colliers International in Canada. Over the last 10 years dozens of downtown parking lots from cities across the country have been” torn up”, and in their place, now stand condominium buildings 🙂 “A shortage of spots, a lack of new supply and insatiable demand have all contributed to steady price gains in an often forgotten corner of commercial real estate.”
While the trend looks bad for drivers who work in the city core, this is becoming very lucrative for parking lot owners. 🙂 Unfortunately when I found out about the following listing the property was already sold so I missed a good opportunity to buy a lucrative lot in a high traffic location.
Not that it matters because I don’t have the kind of money to buy it anyway, haha. 😀
It’s more common for parking lots to sell in bulk such as in the form of a parkade, however sometimes they are also sold individually. For example last month a pair of parking lots in tandem sold for $560,000 in Boston, Massachusetts. It was the result of a bidding war, literally, because the parking was sold via an auction. In 1993, the previous owner bought the two spaces for $50,000. You can double check the math if you fancy, but I reckon that’s a 12.8% average return on investment per year. Not bad at all. 😀
Investing in parking lots
Owning a parkade seems to be a good way to diversify one’s investment income. Not only do prices rise over time, but they also provide income potential. And there is very minimal upkeep to maintain a parking lot, kind of like maintaining farmland.
How to invest in parking spaces? I can only think of a couple ways at the moment. But maybe you can think of others.
- Call a local commercial real estate agent. For example Macdonald Realty, Avison Young, and Colliers International are just a few names in the greater Vancouver area. Google them and contact one of their reps. Ask them to help you find a parking lot. Similar process to buying a house with a realtor.
- Buy an apartment/condo that comes with a parking spot. Live in the building yourself, or rent out the condo to someone else who doesn’t drive. Rent out the parking spot (like these examples from Craigslist) and earn some monthly income. 🙂
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Random Useless Fact:
Mosquitoes are more attracted to blue than any other color.
Who knew the parking lot industry was so lucrative. Well, actually I kind of figured, but there are some good numbers here to back up the observation!
Yup, it’s surprisingly profitable even though it’s not a very big part of the overall real estate sector 🙂
I think about this every time I go downtown for anything. Good price appreciation for the parking lot itself or even the land it’s on if it’s in a thriving and growing downtown area. Plus I’m sure there’s solid cash flow from a parking lot. It’s not like there’s a whole lot of maintenance, at least I wouldn’t think there would be. Definitely something to consider if you have the chance to realistically buy one.
I don’t think it would be expensive to maintain a parking lot either, especially the outdoor ones. With a whole parkade there might be some overhead expenses like security, gate keeper, and customer service hotline, but with so many parking lots it’s probably still worth it.
That’s just insane the price of parking I couldn’t imagine at all paying that kind of money. I agree if you can find a place that comes with a spot, take it. Even if you don’t have a car, take it lol.. rent it out and make some $$$ unless of course there are provisions with that as well.
It adds to the argument that houses are better to buy than apartments because lots of people with houses also have a detached garage which they can rent out as either a couple of parking lots or a storage place. Usually they can get a few hundred dollars a month from the local ads I’ve looked at.
What a great way to invest and get good returns. I never thought about parking lot. Good insights, thanks for sharing
With barely 2.5% on the 10 year treasury, good returns are getting harder to come by.
I actually think it’s a great investment because the upkeep is minimal! I actually rent my garage for $150/month because I don’t have a lot of stuff and there is plenty of street parking. It town close to mine, garage/parking is very limited so usually couples can only park one car there but prefer to have two just in case. It works out perfectly, although it does make me nervous that my landlord would be seriously pissed if he ever found out.
That’s great. $150 a month is enough to pay for all my grocery bills 🙂 Hope you can continue to rent it out for the foreseeable future.
Thats a lot of money! I heard about this with Pauline who says she rents parking spots. I never thought about it and to be honest there are a lot of ways to make money these days. Low maintenance and a great return.
Low maintenance is pretty important for me when investing. I like to set up the money and forget about it 🙂
I wrote about making money renting your parking space recently, and a few readers suggesting buying one so thanks for running the numbers, I am always amazed at how much people are willing to pay just to park a car.
The more dense the location the better it is to do that. The UK is probably one of the best places to do it because land in general is so expensive. If you don’t own a car then it only makes sense rent out your parking space.
I know that a parking spot goes for about $150 in my condo building, but that isn’t downtown either. What? You don’t have $20MM to drop on some land at Granville? 🙂
I don’t think it would be too difficult. All we have to do is create a shell company with 100 investors. Each person puts up $100,000 of their own money. Then we borrow the other $10 million from the bank and ta dah! $20 million. Most lenders would have no problem helping us out because of our 50% down payment. The business would be cash flow positive for sure 🙂
I always favored commercial property as an investment rather than residential and having a parking lot as an investment is actually a cool idea. Very little maintenance compared to residential properties, I guess.
Same reason I prefer commercial property as well. You can get triple net and way less hassle 🙂
If only I had a few mill to throw around! Definitely not something conventional that people would think to invest in. If I ever decided to live in a condo in downtown Toronto I doubt I will get a car so renting out my spot would be some nice income 🙂
Great idea. I would be doing the same with my current condo except I current do have a car. I suppose I can park it outside on the road which will free up my parking space, but since I don’t live in the city center I probably can’t get a good rate for my spot anyway :0)
An interesting way to invest in parking lots is through PKT-V, Parkit Enterprise. It’s a corp though, so you’d rely on capital appreciation to make money off this.
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