There was a time in Brooklyn, New York, probably 20 years ago more or less, when parking garages and parking lots were a great convenience and in terms of a Commercial Real Estate investment, a safe bet. The attraction of owning and investing in this asset type was the ability to adjust parking rates and the garage or lot had low upkeep compared to an apartment building or an office building.
As new residential condominium buildings sprouted up in many prime Brooklyn's neighborhoods, garages gained in value. However, as land and development sites in prime locations became scarce, investors had to look elsewhere for opportunities to build.
According to Jeff Grandis, broker at Accord Real Estate Group and a lifelong Brooklyn resident, “In the Midwood neighborhood, specifically the Kings Highway East teens area, over the last 15 to 20 years several parking lots and parking garages have been sold to developers”. For example, the huge parking lot between East 14th Street and East 15th Street, between Kings Highway and Avenue P was purchased from the city by developers who built a 4 story commercial building with the tenants T.J. Maxx on the 1st floor retail, New York Sports Club on the 1st floor and Visiting Nurse Service occupying the top floors. Also, between East 13th Street and East 14th Street, between Kings Highway and Avenue R, there was originally a parking lot that was purchased by developers who built a multi level outdoor parking garage, which was 6 or 7 years later sold to another developer who build a commercial building which now houses a Target Store on the 1st and 2nd floor, a Marshalls Store in the basement and offices on the several remaining upper floors with a separate lobby entrance on East 13th Street.
The combination of the rise of urban bicycling, app hail car services like Uber and Lyft, the shift to long term remote work places, the effect of the pandemic on our live and work lifestyles and the decline of car ownership have all contributed to owners, investors and developers seeing parking garages and parking lots as ripe for redevelopment.
According to David Schectman, a senior director at Meridian Capital Group “anytime a garage comes to market, there is tremendous interest in it”. Jeff Grandis cites another example of a parking lot conversion in Downtown Brooklyn. We were talking to the owners of the last 3 remaining large privately owned parking lots in Downtown Brooklyn before the city upzoned the area and the boom in development took place. The family that owned the lots lived in Florida and ended up selling the 3 lots to a developer who eventually built several terrific commercial buildings on those beautifully located parking lots.
Sales prices of parking garages and parking lots vary by location. According to Co Star data in 2020, as of August. 47 garages had traded nationwide and 2 sold specifically for redevelopment with 1 garage being located at 98 Dekalb Avenue in Brooklyn, NY. Developer Rockrose is incorporating the garage into it's 47 story mixed use tower.
Parking garages are not necessarily being viewed as a teardown by developers, but are in some cases being repurposed. David Schectman of Meridian Capital Group says “people are saying maybe it should be used as storage, an educational facility, rehab, medical or in some cases last mile delivery spaces for e commerce providers such as Amazon.
To be continued...
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