By Maxine Hicks and Andrew Much, DLA Piper
The coronavirus disease 2019 (COVID-19) crisis has profoundly impacted the way we will work, shop and choose to commute by car in the years to come. For example, most of us have now learned how to effectively telework and we have become adept with the use of at-home video conferencing. These changes in our work and living patterns will fundamentally impact the Atlanta real estate market and will accelerate trends already underway regarding a reduced need for parking spaces in the City’s core market areas. This article examines the adaptive re-use of parking spaces as the demand for such spaces decreases and the trend of parking lot vacancy accelerates.
The United States has as many as two billion parking spots for about 250 million cars. Donald Shoup, a professor at UCLA’s Department of Urban Planning, notes that the aggregate area of parking per car in the United States is now larger than the area of housing per human. Many of these spaces are less likely to be utilized in the future due to work at home trends, e-commerce, increasing urbanization and recessionary economic conditions that may make it more difficult for individuals to own, operate and pay to park their vehicles. A number of shopping centers and big-box retailers have already closed or have been materially impacted by changing shopping patterns. Anticipated shutdowns of existing retail, restaurant and hospitality facilities arising from current conditions in the months to come are anticipated to result in the further availability of buildings and attendant parking facilities for redevelopment. Moreover, ride-sharing services have reduced levels of private car ownership and a future transition to autonomous vehicles will dramatically add to a further surplus of parking space over the longer term.
Historically, city zoning codes required a minimum number of parking spaces depending on property use, contributing to the current parking glut. Atlanta’s zoning code was recently modified to address this issue by limiting (or eliminating outright in some instances) the minimum number of parking spaces and/or implementing parking maximums for certain uses or zoning districts. The City is also exploring parking taxes to encourage downtown development and generate revenues for needed infrastructure improvements.
Structured parking facilities are generally unsightly and impair urban walkability. Such facilities are extremely costly to develop and maintain, which in some instances can consume up to third of total project construction costs. Relaxed parking requirements and other regulatory innovations will result in reduced project costs (making future affordable housing projects more economically viable), foster opportunities for innovative project design, establish more walkable and aesthetically pleasing streetscapes, and create increasingly valuable redevelopment opportunities for developers by converting underutilized spaces to more productive uses.
Parking technologies are already being utilized to maximize the efficient use of existing facilities, including digital technologies to enable dynamic pricing and the use of sensors and data analytics. Mixed-use projects requiring parking decks are utilizing some of these technologies to establish flexible, shared parking regimes. For example, we have already seen parking facilities developed or otherwise utilized for sporting venues that are not only utilized for home games but also serve the needs of nearby retail customers, office tenants and apartment tenants. Such arrangements typically require the thoughtful collaboration of developers, design teams and engineers, along with attorneys to properly memorialize the arrangement.
Communities are increasingly converting underutilized parking facilities into valuable assets. Public-private partnerships have successfully redeveloped parking areas into comprehensive, mixed-use projects such as City Springs in Sandy Springs, a large portion of which was developed upon the former location of a surface parking lot.
Innovative parking projects are taking place nationally and internationally, including projects utilizing flexible design for new decks through the use of flat floors, higher ceilings and exterior ramps to facilitate their later conversion to usable tenant space and the re-use of existing underground garages into “last-mile” logistics facilities.
The creative, adaptive re-use of parking facilities will remain a key focus of developers and building owners in the years ahead. The key for all investors is to stay ahead of these trends and be well positioned for incremental changes as demand for parking spaces wanes. There are many opportunities for Atlanta becoming a national leader in the development of such innovative solutions.
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Maxine Hicks is Location Head of DLA Piper’s Real Estate Practice & the Global Co-Chair of the Infrastructure, Construction, and Transport Sector. She focuses her practice on real estate development with a particular emphasis on large mixed-use, transit-oriented developments, including destinations for stadiums, entertainment, hospitality, club and resort projects. She is a longtime member of the Urban Land Institute (ULI) and member of ULI’s Community Development Council.
Andrew Much is an attorney at DLA Piper concentrating his practice in commercial real estate transactions, with a focus on the development, acquisition, disposition, leasing, management and financing of complex mixed-use developments, master planned communities, transit-oriented developments, stadium, hospitality, golf, marina, club and resort projects throughout North America. He is also a member of the Urban Land Institute.
