Homeowners, real estate investors, and soon-to-be homeowners who keep an eye on the ups and downs of residential real estate do so at least partly to anticipate the future of our own residential market. This even though they are also aware that markets have a tendency to be stubbornly unpredictable. One example is currently demonstrated by a segment of the New York City real estate scene: the parking space segment.
Most Out-of-Towners would have thought that the problems that Gotham has been coping with would have rendered most of Manhattan real estate a disaster zone. After all, with neighborhood small business owners crying “foul!” because of COVID restrictions, labor shortages brought about by competition from extended government support payment programs, and new controversies over sporadic customer resistance to mandatory vaccine mandates, the general impression (for the rest of the country, at least) has created images of shuttered watering holes and empty Gotham streets and office buildings.
So, the idea that there might be a run-up in the value of auto parking spaces would seem counter to common sense. Yet here it was, headlining a recent news story with Shepard Smith: “Parking at a premium in New York City as Demand Soars, along with Prices.”
According to the report, developers were taking advantage of a looming parking shortage. Visitors to the City have long chafed at the unavailability of streetside parking and the premium on hourly (or minutely) charges in parking garages. Now it seems that an added problem has further inflamed the market. Restaurants have erected sidewalk extensions to accommodate customer-safe outdoor dining. The open-air extensions have proved popular with diners—but have gobbled hundreds of hard-to-find curbside parking spaces.
The result is “a new space race”—a scramble by high earners to reserve permanent spots for their vehicles. Pandemic-connected resistance to public transportation has also caused “everyone to buy a car.” For garage impresarios willing to sell spaces, the result is a 10-pin strike—because “people who don’t even own an apartment” are buying cars.
“What would you pay?” was Shepherd’s question regarding a permanent space in a parking structure. The answer for Manhattan’s Upper East Side is not for the weak-kneed. This is “a convenience play; it is a luxury play” for motorists whose earnings mean they aren’t among those “who are deciding whether it’s cheaper to rent or cheaper to own.” The answer to Shepherd’s query (for a single spot): $350,000.
Why would anyone pay that kind of tariff for a 9’x18’ piece of cement? It’s for those for whom time is of the essence (time being “the last luxury”). And time is fast running out for anyone looking for a parking space in NYC.
For real estate followers, it’s a reminder that markets react to all sorts of phenomena—not all of which are foreseeable. One ageless trend that has weathered it all: the long-range value of real estate. Come what may, they simply aren’t making any more of it.