PARKING COSTS MAY BE SNEAKING UP EVEN THOUGH OFFICE SPACE IS NOT
November 01, 2011
Don’t overlook parking costs when negotiating your office lease. Although rental rates have not been moving up, in some markets, parking costs have jumped significantly. Major markets showing the greatest increase compared to last year include Houston up a whopping 21%, followed by Washington, DC up 20%, San Francisco up 14%, Chicago up nearly 10%, Seattle up 9%, Honolulu up 8%, and Boston up 7%. Parking costs represent $3 to $6 per square foot in annual rental rate in some markets so increases can add up quickly.
In this type of economy, good tenants have leverage with landlords if they know where to look for opportunities. Parking can be one of these opportunities! Often, tenants and their broker/consultants do not realize that you can negotiate for abatement on car stalls and also secure caps on increases moving forward. Even if the landlord does not own or control the parking, it probably has leverage to negotiate on the part of the tenant. Also, if your company has a workforce that is mobile and only using paid parking stalls occasionally, use new parking software to track usage and allow your company to pay for fewer stalls and let you play your own float. Finally, don’t forget to secure the right to give stalls back just in case your company has to exit the space and your subtenant does not need all of the stalls – they will not be a drag on the economics.
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