Around the county, a unique commercial building niche has emerged in cities where space is at a premium and ground-up construction is hard to do. Developers have taken unused, unprofitable parking garages and turned them into office buildings and condos.
- In Greenwich Village, developers are turning two parking garages into condos. For one of the projects, in a former garage occupied by Hertz, the developer sheared off the back of an eight-story garage and added two stories. The developer told the New York Times that if he had torn down the building, the neighborhood’s zoning restrictions would have forced him to do a much smaller project.
- In Minneapolis, a city developer bought a seven-story, century-old former factory building that was being used as a parking ramp. The owner continued to use it as a garage for a few years but then decided to invest $25 million to convert the building into 88 apartments. Why? Because it was in a highly desirable area, near a farmer’s market, a professional ballpark, and a light rail station.
- In Atlanta, the metro transit authority plans to lease three underused parking garages near the rail lines so developers can turn them into retail space and apartments. The added benefit of this plan is that more people will live near the train, naturally keeping more people off the freeways during the morning commute.
Parking Garage Conversions Will Probably Remain a Specialized Niche
We don’t mention this trend with the expectation that California developers will suddenly leap at parking garage conversions. This will most likely remain a small niche in the market. For one, only so many available parking garages sit in desirable areas in a city. Also, this particular type of conversion can be difficult and expensive due to their unusual designs.
Rather, we draw attention to this trend because developers and investors should keep an open mind when they have a use for a building and are considering their options. Previously we showed that warehouses can effectively be used for schools, nonprofits, and churches. Opportunity hides in every corner and opportunity can be found in large, underused parking garages.
Why There Could Be More Parking Garage Conversions
That being said, we do think that there will be many more parking garage conversion projects in California in the coming years. Here’s why:
First, developers sometimes make mistakes and put parking garages in places that don’t work and aren’t profitable, or industries close down and traffic patterns change. That can happen in California cities, too. Developers in other cities have demonstrated that they can convert these buildings at a lesser cost than if they tear the building down.
Secondly, there could be less need for parking garages in coming years, especially in the prime downtown cores. The California state government has aggressive plans to reduce the number of cars on the freeways and encourage the use of public transit systems, particularly to get more people to use buses and trains from the suburbs into the cities.
At some point, San Francisco, San Jose, Los Angeles, and other commuter cities are going to have to reduce traffic and gridlock on the freeways and downtowns. In some major cities, public transportation is already on the rise. Los Angeles County has poured billions into its metro lines. While only about 5 percent of people use public transportation in Los Angeles, ridership on the train has climbed steadily to 350,000 a day, according to an editorial in the LA Times. This all means that one day — perhaps not right away, but in the future — there should be less need for parking spaces downtown.
Obviously parking garages won’t suddenly disappear in the cities, but we can already cite as examples a few inspiring garage conversions. In the Castro neighborhood of San Francisco, for example, three garages on 18th Street were converted into stores and restaurants with hip facades. Admittedly, these are smaller-scale projects, but the point is that the developers and owners saw an opportunity to do something with an unusual structure and have turned it into something great.
Of course, spotting these opportunities takes some effort and a developer should not try to do this alone. As always, developers and investors should seek out an experienced commercial real estate consultant who is familiar with all the unique properties and possibilities in an area.
If you are looking into a major conversion project, you don’t have to go it alone. You can get a thorough analysis of the market with all the available options from a consultant whose community values align with your own. Contact DCG Real Estate today to learn more.