Some people think New Jersey represents a different world from New York. They envision a state filled with farm stands and quaint shore towns—and maybe one or two industrial sites along the New Jersey Turnpike.
But there's also a part of New Jersey that's practically the sixth borough of Manhattan. Cities like Jersey City and Hoboken offer proximity to Manhattan, stunning views of the river and luxury apartments. They also have a dearth of parking spaces, and that can be one of the major drawbacks of condo and co-op living in the area. Just try looking for a parking space in the streets of Jersey City at 9 p.m. to get an idea.
"That whole part of Jersey is pretty condensed," says Kristen Sokich of Propark America in Hastings-on-Hudson. "If you look at a population map, it's really just an extension of New York City. Northern New Jersey is just packed with people."
That's what makes buildings with parking lots extremely attractive to HOA members.
According to Sokich, many of New Jersey's managed parking lots exist near transportation hubs and high-traffic downtown areas. The reason for these lots is pretty basic.
"Space demands," Sokich says. "In a lot of downtown areas like Elizabeth or Montclair, there aren't enough parking spaces. He adds that even an upscale community like Ridgewood has requested bids for a spot in its business district.
But there is also an interest in lots affiliated with condos and co-ops.
"There are also residential needs," Sokich says. "If you drive up and down River Road, in what they call the Gold Coast, especially in Hoboken, most of those residential buildings have managed parking with operators handling the monthly billing and providing valet service."
Operating a Garage
When it comes running a garage, there are two basic options. The first is to lease out parking facilities to an operating company. The operator "rents" the facilities and handles virtually all aspects of the operation, and keeps the money that the facilities bring in. According to Andrew Grossman of GGMC Parking LLC, operators go through a bidding process to gain contracts.
"[When the] lease is coming up, the managing agent will contact some companies they know…or they may hire a broker to look for a garage operator. Generally, they'll put it out for bid and take proposals."
"Typically in the New York market, most condo and co-op buildings tend to lease out the parking facility for a fixed amount of years…and the operator pays a fixed rent," says Sokich. "Sometimes they work into it that a certain amount of spaces will be made available to the residents of the building at a set rate, but basically the operator charges market rates on the parking, and pays the real estate tax and utilities himself."
Grossman says the other option is to have a management company run the facility. This entails paying the company a fee to run the facility, and the building keeping the revenue the garage generates.
Each system has its benefits. Having an operator lease out the facilities generates revenue without the condo or co-op board or management company without having to worry about the day-in, day-out operation of the facility. Using a management company generally gives the condo or co-op more say in how the garage is run.
"You bring in a management company, and the focus changes a little more to customer service, greeting people, helping them with their packages, providing amenities like tire inflation, battery jump-starts, little things like that," Sokich says.
Sokich says that leasing is by far the more popular option.
"I think in [the New York area], 90 percent of the market goes with leasing and only 10 percent probably has their parking managed, where in the rest of the country it's probably the reverse of that," Sokich says.
Bringing in the Revenue
As most buildings have more residents than parking spots, spaces are generally sold on a first-come, first-serve basis. The amount of money a parking facility can generate is going to vary based on several factors—and location is one of the biggest variables.
"It depends on the neighborhood a building is in," Sokich says. In Manhattan, neighborhoods can vary from one block to the next. One block can make a big difference in the amount of rent parking operators are able to charge for a parking space."
For a general range, Sokich says a parking space in Manhattan can bring in between $2,000 and $8,000 a year. A garage with 200 spaces, therefore, has the potential to generate $1.2 million in a year. But of course there are operational costs, so that's not pure profit.
Being a homeowner in a building doesn't mean someone gets to park in his or her building's lot for free. But deals between buildings and a parking operator or management company can stipulate that shareholders or unit owners get a discounted rate on spaces.
It's also true that although when a company operates a condo or co-op's parking facilities, the lot is open to the public, contracts usually stipulate that a certain amount of spots are set aside for the building's residents, and/or that residents are given priority status on waiting lists.
"If it's a public parking facility, typically it's first-come, first-served," Sokich says. "But a lot of condo boars will put in restrictions saying [a certain amount] of spaces have to be made available to the residents of the building."
"Each shareholder is entitled to a parking spot," Grossman says. "If all the spots are spoken for, they get on the waiting list, and they're favored over an outsider. Generally they pay the same rate, but sometimes [buildings] make deals where shareholders pay a lower rate."
Spaces can also be a big investment for homeowners, with some people paying amounts for parking spaces bigger than a lot of people put down to buy a home. Sokich says she's doing consulting work for a new condo complex in New Jersey that is selling spots for between $30,000 and $35,000. That price is an optional amount for homeowners to pay for in addition to their apartments, and they will be held on a different lease.
Selling a parking lot is an option more buildings are considering, Grossman says. "We've actually put in quite a few offers like that to actually buy the parking component of the building," he says. "It's not something that's prevalent in the marketplace, but I think it's something people are starting to look at intently."
The obvious reason buildings make that decision is money. Selling a parking lot can bring millions of up-front dollars to a building, which in turn can be used for improvements to the building or investment. Provisions can made to ensure that the space will only be used for parking (preventing something unwanted, like a store or another residential building being built in the space), and that a certain amount of spaces will be reserved for building residents. Sokich says it's an attractive option for parking operators, who are always looking for new spaces, and for the building because of the money it can bring in. The risk, though, is the building is giving up control of the lot.
"It's not costing the co-op or condo board anything to sell it off, other than the fact that they're going to get this lump sum of money rather than getting it over 20, 30 or 40 years," he says.
So even in suburban New Jersey, parking is a valuable commodity that residents can't do without. As the song goes, they paved paradise to put up a parking lot, wherever you happen to hang your hat.
Anthony Stoeckert is a freelance writer and frequent contributor to The New Jersey Cooperator.