By Konrad Putzier
Housing and parking in New York used to be like Laurel and Hardy: one was unimaginable without the other.But as apartment prices skyrocket and bike lanes expand, this very American friendship is showing strains.
Growth in parking space hasn’t kept up with New York’s housing boom in recent years.“Luxuries were hit hard during the recession,” said Howard Greenberg, president of Ace Capital Ventures and a specialist in brokering parking garages.
“Parking as a service and luxury industry has lagged behind since. Many parking spaces were taken off the market.”
Between 1978 and 2010, off-street parking space in Manhattan decreased by one fifth, according to the City’s Public Parking Study. At the same time, the supply of housing has grown dramatically.
Mayor Bloomberg’s campaign to reduce car traffic is a major factor depressing the market for parking space. “The Bloomberg administration is definitely encouraging public transportation,” said Greenberg. “It has become more difficult to drive in the city, and there are more alternatives to driving.”
Over the past six years, the city has established 300 miles of new bike lanes, and both mayoral candidates, Bill de Blasio and Joe Lhota, have said they plan to continue bike-lane expansions.
Meanwhile, new pedestrian zones have narrowed streets and bicycle racks for the new Citi Bikes have cut into parking space.
But urban planning is only one of the drivers behind New York’s shrinking parking space.
Rising real-estate prices have created a strong incentive to turn parking garages into residential or commercial properties.
“You can never make as much money with a garage as you would by selling the property,” said Michael Stoler, president of New York Real Estate TV and a managing director at Madison Realty Capital. “We used to have all these garages in Midtown, and now we hardly have any. The same happened at the Highline.”
According to Propertyshark.com data from May, more than 92 garages have been converted into residential or commercial real estate in the past six years.
The Naftali Group recently purchased a rental car garage on West 77th Street for $45 million, and DHA Capital and Continental Properties will start converting a parking garage on East 13th Street into a 12-story residential building in November.
If zoning regulations prohibit converting garages into residential properties, they can still be turned into hotels, according to Stoler.
National trends are at play, too. “There certainly has been no growth in car traffic in New York in 20 years and, in the past few years, we’ve seen a reduction in driving,” said Sam Schwartz, CEO of Sam Schwartz Engineering, a transportation planning and engineering firm.
“This is partly due to the recession. But the decline started nationally even prior to the recession. Between 2003 and 2005, there was a significant drop in the number of young people driving. This is the first time this has happened.”
Schwartz explains this shift with the popularity of car and bike sharing, as well as the declining importance of cars as status symbols. He added that 70 to 85 percent of visitors ato the Barclay’s Center in Brooklyn arrive by foot or public transportation, leaving the modestly sized garage at best half full.
Schwartz said he has noticed similar trends in other parts of Brooklyn, Manhattan and Long Island City.
While parking space may be shrinking, it is far from disappearing. “Running a garage is still profitable,” said Stoler.
In September, the German investment firm GLL Real Estate Partners paid $53 million for a parking garage in Battery Park City. Christian Goebel, who oversees GLL’s activities on the east coast, said the company has no plans to convert the garage, citing its long-term lease with Goldman Sachs. He added that GLL expects an increase in demand for parking space in the neighborhood due to recent development projects.
Still, there is little doubt that car traffic will be a casualty of New York’s modernization. “Parking space in Manhattan will continue to shrink,” said Schwartz. “Development trumps parking when it comes to money. The emphasis in the Hudson Yards will not be to provide parking space for every tenant – quite the opposite.”