Car parks: What drives buyers to invest in parking spaces

For city drivers, finding a car park can be the stuff of nightmares – and this tightened supply plays a large part in why property investors are putting their cash in the car park market.

Investing in car parking spaces can be a lucrative but somewhat untapped sector for commercial buyers, who may view the prospect only through the lens of convenience.

However, industry experts say the low-maintenance nature of the asset, and heightened demand in car-dependent hubs, makes it an appealing prospect for passive income.

Current listings on realcommercial.com.au range from single car bays in secured parking sites (for private lease or buyer’s own use), to purchasing an entire multi-level car park with long-term leases in place.

“Driving is engrained in Australia’s culture,” said Scott Hawthorne, a property negotiator at CBRE Melbourne. “You would struggle to find a household throughout Melbourne that has less than two cars parked in the garage.”

Considerations for investing in car parks

Hawthorne said car parks are “a sound investment vehicle” that require low levels of CAPEX and little ongoing maintenance, particularly with diminishing supply for car parking in CBDs and city-fringe markets.

“Freestanding multi-level car parks are often ripe for redevelopment into high-density accommodation (built to rent, residential, hotel and commercial offices, etc.) and this withdrawal of supply translates into increased competition from drivers to secure parking in major activity centres,” he said.

He also pointed to the low barriers to entry for car-parking operators, meaning there’s a depth of tenants available to sign a lease and commence operating, “providing confidence” for private investors.

Stuart Norman, chief executive officer of Parking Australia, said there are different ways to purchase a car park but it ultimately comes down to why the buyers wants it.

“If it’s for personal use, a longer-term lease may be something to consider [instead]. This means that should a purchaser move place of residence or work, they will not be left with an asset they’re not using,” he said.

For business buyers, Norman said they will need to find out if the car park will be subject to fringe benefits tax and state-based parking levies. “These can have a significant impact and run into the thousands of dollars,” he cautioned.

How COVID has affected the car park market

Cities with prolonged lockdowns have naturally been seen the most significant effects on high-density office hubs – and demand for car spaces has “decreased in line with the decrease of people working in our CBDs”, Norman said.

“Some equate the demand for parking with the number of cars on the road. However, there is little evidence to support the relationship between traffic and parking. What we have seen during COVID is that the demand for parking is directly related to office occupancy.”

However, Hawthorne said some trends have emerged during the pandemic that are having a knock-on effect in the parking sector.

“With the introduction of on-street dining, more public car parking was withdrawn from the supply pipeline, and demand for car parking is only growing in major retail areas.”

Top car parks for sale around Australia

If you’re interested in investing in a car park,  take a look some of the top car parks currently for sale.

These range from entire car park to spaces within larger car parks.

Car park: Level 8, 251 Clarence St, Sydney NSW

There is one car space for sale within this Sydney car park. Picture: realcommercial.com.au/for-sale

Asking price: Contact agent

This vacant, secured CBD car space on Clarence St offers a convenient inner-city space, close to Darling Harbour, Barangaroo , Town Hall and Pitt St. It’s undercover and accessible 24/7.

Car park: 51 Astor Terrace, Spring Hill QLD

There are four car spaces for sale at Ballow Chambers. Picture: realcommercial.com.au/for-sale

Asking price: $150,000

There are four vacant-possession car parks for sale at Ballow Chambers Car Park, in the inner-north Brisbane suburb of Spring Hill, for $37,500 each.

This building is close to Queen St Mall, Central Rail and the CBD.

Car park: 200 Pirie St, Adelaide SA

There is a two car spaces for sale at this Adelaide car park.

Asking price: from $45,000 each

There are two parking spots to choose from at this secure, strata-titled car park in Adelaide’s CBD, near Hindmarsh Square. Both are available as vacant possession.