As the automobile took over America, so did parking lots and parking garages.
There are between 700 million and 2 billion parking spaces in America – or in other words, between 2.5 and 7 spaces for every registered vehicle. Approximately 10% of this inventory is paid parking. And for decades it was a pretty stable business.
But low barriers to entry make it a crowded and fragmented industry. The competition is fierce. Insiders say demand for paid parking is either flat or declining in nearly every market except healthcare and events.
The parking industry as a whole brought in about $121 billion in 2022, according to Jerry Marcus, who runs a Boston-based parking consultancy called Parking Advisory Group.
The industry is slowly recovering from the pits of the Covid-19 pandemic, when revenues fell to $58 billion in 2020, down 56% from 2019.
The parking industry as a whole is expected to bring in around $144 billion in 2023. That’s a 10% increase from 2019 levels. Still, many industry players are concerned about the decline in Requirement.
E-commerce has dealt a blow to brick-and-mortar retail, the rise of ride-sharing has eliminated the need to park in many cases, and post-pandemic work trends have meant fewer people are traveling to urban areas five days a week, if at all.
Within the parking industry, there is a group of companies that manage parking lots for owners. This industry generated between $8 billion and just over $10 billion in revenue in 2022, according to market estimates. From 2018 to the end of 2023, IBISWorld estimated that they will have decreased at an annual rate of 7.7%. But the parking facility industry is expected to grow by 1.4% from 2023 to 2028.
Growth is expected to pick up, albeit slightly and slowly, in part due to pent-up demand and operator adaptations, including providing services for the growing ride-hailing market and the rise of electric vehicles, such as charging or vehicle maintenance.
The industry has been forced to find ways to reinvent itself. Parking management companies such as PS Plus have invested in new services and technology, including an app that allows customers to reserve spaces in advance and pay for parking on their phone, and technology that allows companies to change prices as needed, for example by depending on the time of day or when demand is high. There’s also technology to automatically charge cars when they get in and out a lot.
In 2022, technology solutions accounted for approximately 2% of SP Plus gross profit. The company expects this number to increase to 10% by 2025.
“What we’re discovering with technology is that we can deliver hardware and software on a very competitive basis,” said Marc Baumann, CEO of SP Plus. “Even in situations where we may not be a parking operator at the moment. And that makes the addressable market for us bigger than it was before.”
Tim Mulrooney, head of the global services group at William Blair, said big players like SP Plus are better positioned to deal with falling demand than smaller parking companies.
“Bigger people, people with the capital to invest in R&D and technology, technology capabilities can do things like dynamic pricing, pricing, portalless technologies, other things that really differentiate them from the mom and pop parking management company that just runs a couple of locations in one area,” Mulrooney said.