The Real Deal New York

City garages, lots a powerful pull for developers

October 26, 2007
By Lauren Elkies

Turning parking spaces into people places is a staple of New York development, where garages regularly become apartment buildings. Now, parking powerhouse Edison Properties is taking this a step further, building a 23-story, 210,000-square-foot, 243-unit, mixed-use rental building at its 188 Ludlow Street location.

Edison won’t be leaving its roots behind — the rest of the site will be a parking lot. Hunter Roberts Construction Company is the general contractor for the project and Costas Kondylis & Associates is the designer. The $90 million construction job is expected to be completed this fall.

The Lower East Side building moves Edison Property’s portfolio beyond parking services, mini-storage warehouses, workspace offices, studios and executive workspaces, but it isn’t the start of the company’s exodus from the parking industry, said Michael Field, Edison’s executive vice president of real estate development.

“2006 marks Edison’s 50th anniversary,” Edison’s president, Gary DeBode, said in a statement. “Entering into residential development in this dynamic location is the perfect way to celebrate this milestone.”

Edison is also working on a mixed-use project with a public parking garage on the full block bounded by 17th and 18th streets and 10th to 11th avenues. The site was formerly a public parking lot used by the United States Drug Enforcement Administration. Some of the space is occupied by the High Line elevated rail structure, which the city will convert into a public space.

Edison is not the only property owner currently replacing a parking site with a residential tower. Developer Gerald Brauser is turning two Manhattan parking garages into residential buildings, Crain’s New York Business reported. Developer Sterling Equities is seeking to convert four garage buildings at 1-23 College Place and a two-story garage across the street at 12-14 College Place in Brooklyn Heights to residential use. The city’s Landmarks Preservation Commission is considering the plans.

Vincent Petraro, the executive director of the Metropolitan Parking Association, said the parking lot won’t become an endangered species just yet.

There are still 2,000 parking lots and garages in New York City, according to the city’s Department of Consumer Affairs, which licenses them. The number of garages and lots is dwindling because the land and building sites can make more money as apartments or as another type of commercial space.

“Parking lots are prime development spots because they occupy large floor plates and can almost always be immediately vacated,” said broker Robert Knakal of Massey Knakal Realty, a company that is marketing a few parking lot properties as development sites. Until the moment the developer puts the shovel into the ground, the property can be used to generate income.

Demand for parking spots is driving up parking rates.

Midtown Manhattan in June topped the list of the most expensive parking districts in the country, with a median price of $574.12 per month including taxes, according to a Colliers International study of garage rates.

“Clearly, the parking business is getting better and better because of the lack of significant construction of new parking facilities in addition to the elimination of parking garages and lots based on all the new development that is going on,” Knakal said.

Thornton Tomasetti Group, which designs parking garages and other commercial buildings, has not worked on a New York City garage since about five years ago, when the company designed a 400-vehicle standalone garage in Jamaica, Queens. Abraham Gutman, senior vice president of Thornton Tomasetti Group, said the Big Apple is not a parking-friendly city because of its emphasis on public transportation and stringent zoning laws.

The garage business can still be profitable. Manhattan garages generate as much as $8,000 per space annually, according to a parking garage study released by market research firm Marketdata Enterprises in April 2005.

Parking site owners have started selling their properties but keep themselves in the business by negotiating long-term leases for existing parking businesses or simply retaining an interest in the lot, Knakal said. Think of it as a parallel approach to the business, one Knakal said will continue.

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