Should you invest in a parking lot?

Harambee Avenue car parking in Nairobi (PHOTO DAVID GICHURU STANDARD)

NAIROBI, KENYA: Searching for parking spaces in the Central Business District of Nairobi can be a tiresome activity for any motorist. So much that many people choose to take matatus to the CBD and leave their vehicles at home or on the outskirts of the city centre.

Sometimes it is not the high cost (Sh300 per day per vehicle) of parking spaces; but lack of them and safety of the parked cars.

According to an IBM global parking survey released on September 28, 2011, drivers in Nairobi experience significant pain and frustration in their quest to find a parking spot.

The survey shows that drivers in both developed and emerging economies experience the same parking frustrations. IBM surveyed 8,042 commuters in 20 cities on the following key issues: longest amount of time looking for a parking place; inability to find a parking place; disagreement over parking spots; received a parking ticket for illegal parking; and number of parking tickets received.

Nairobi ranks position 13 out of a total of 20 cities. Chicago had the least pain when it comes to parking in the cities studied, followed by Los Angeles and Toronto. New Delhi is at the bottom. Johannesburg, the only other African city included in the survey, fared better than Nairobi, at position eight.

Globally, drivers spent an average of nearly 20 minutes in pursuit of a coveted spot. African drivers averaged both the shortest and longest times searching for parking in the last year when compared to the other 18 cities – Johannesburg averaged 12.7 minutes and Nairobi averaged 31.7 minutes.

Thirteen per cent of drivers in Nairobi reported driving around for more than one hour for a parking spot within the last year.

It is estimated that more than 30 per cent of traffic in cities is caused by drivers looking for a parking position.

 “Clearly, drivers worldwide are facing frustration and pain, not only during the daily commute, but also when searching for a parking spot,” said Vinodh Swaminathan, director of intelligent transportation systems, IBM at the release of the survey.

The lack of parking spaces has seen institutions, shopping malls and churches convert their compounds into parking spaces during weekdays. They charge for these spaces.

Most of the new upcoming hotels, shopping malls and office buildings are now incorporating parking spaces in the basement floors to cater for the growing demand of parking spaces.

The need for parking spaces forced Jomo Kenyatta International Airport to invest in upgrading a car parking garage that will be able to handle an extra 1,300 vehicles in a move aimed at boosting revenues and ease congestion at the airport.

With the above reasons, isn’t it then time investors started thinking about parking solutions?

In August 2016, City Hall advertised for tenders to construct a Sh4 billion multi-storied car park that would have added 3,000 parking spaces in the city centre.

The building, which was to have commercial and office space, was be situated on the Sunken Car Park land next to the Aga Khan Walk and Harambee Avenue.

The then County Executive for Land, Housing and Physical Planning Tom Odongo said the initial design would’ve been a 17-storey structure, which could go up to 30 floors depending on projected investors’ returns.

The development, he said would have been a public private partnership with the county providing the land while investors put up capital.

The investors would have built, operated and transferred the structure to the county within agreed timelines. The period would not exceed 30 years.

Parking was to be charged based on the amount of time spent unlike the current system, where motorists pay a flat daily fee of Sh300.

The project however, seems to be in a limbo. “The project approval normally takes a long time and sometimes you are forced to do a fresh feasibility study. There was discovery of new gaps in the feasibility study that’s why the delay,” Odongo told Home & Away.

He says investing in car parking space is economically viable but will require a private investor to do that.

“The new plan Governor Sonko has to prevent matatus from the CBD is not wise since the Nairobi Integrated Urban Development Master Plan had incorporated solving the parking menace and if implemented, it may end the car parking issue. It’s not good that every time a new leader comes in, he/she comes in with his new rules/policies,” he said.

There are plans to introduce a bus rapid transit (BRT) system in the city centre once nine BRT corridors are completed. City Hall intends to introduce buses that can accommodate a large number of commuters.

According to Nancy Murule, Real Estate Development at Cytonns Investment, parking offers an attractive investment opportunity and comes with good Return on Investment (ROI).

“Investment in car parking space has good ROI with an average rental yield of 7.1 per cent, compared to 10 per cent for retail, 9.3 per cent for commercial office, 5.6 per cent for residential and 5.8 per cent for industrial and boast of low maintenance cost compared to the other themes,” said Ms Murule.

She adds: “The return can be optimised by use not remaining traditional and exploring innovative parking facilities that use vertical lifts and intelligent parking technology including proper choice of location and brand positioning.”

Murule says statistics in terms of deficit for international cities such as Houston have a requisite parking ratio of one parking slot for every 400 square feet of gross space, from the data in their collection.

 “This ratio is 1 to 472 in Nairobi, meaning for every 2,500 square feet of office we have a deficit of one parking slot per these standards,” said Ms Murule.

University of Nairobi senior lecturer X N Iraki says he is not sure about the return on investment, but it must be high. However he has apprehension that in future, parking spaces may lose purpose thanks to taxi hailing services.

“The maintenance costs and labour costs are quite low. Add the use of technology and the business becomes very lucrative. However with Uber and driverless car, build parking spaces in a way they can be converted into something else. We may need less parking space in future. It’s a good investment in the short run, not long run,” says Iraki.