15.3 C
New York
Wednesday, October 27, 2021

Buy now

spot_img

Downtown Chicago parking garages gain customers as CTA, Metra lose – Crain’s Chicago Business

The coronavirus pandemic has been especially tough on downtown parking garages, but commuters like Treacy Greer have softened the blow.

Before the pandemic, Greer used to ride the CTA’s Red Line from Rogers Park to get to her job downtown. Now she drives, parking her car at a garage near her office in the Loop. The commute costs more, but it’s a price she’s willing to pay to avoid catching the virus on a crowded train.

“It just feels like an avoidable risk,” Greer says.

The rebound in car commuting is one pleasant surprise for downtown garage owners and operators in the COVID-era, bringing in customers that wouldn’t consider paying to park in pre-pandemic times. It’s not the only one: A bigger share of hotel guests and tourists are traveling to and around downtown by car, rather than by taxi or Uber, filling some more parking spots.

The problem, of course, is that the number of people working in and visiting the central business district remains a fraction of its pre-COVID levels. And the recent delta surge has delayed the recovery expected this fall by many downtown businesses that depend on office workers, including restaurants, stores and parking garages. The volume of workers entering Chicago-area office buildings has nearly doubled since early spring, but it’s still less than a third of its volume in February 2020, before the pandemic swept into the city, according to Kastle Systems, a Falls Church, Va.-based company that sells building security systems.

Parking companies are better off than they were last year, which was downright brutal. The biggest downtown parking garage—the 9,176-space structure under Millennium, Maggie Daley and Grant parks—lost $15.3 million in 2020 as revenue dropped 53% from 2019, according to an annual report filed with the city. Its owners have injected more than $16 million in cash into the business to shore up its balance sheet.

Parking operators have tried to adapt to the changing tastes and commuting patterns of their customers. Monthly passes are out—few drivers want to pay for a full month of parking if they’re only coming into the office two or three days a week—and punch-card type passes are in.

“It’s been a total reset in behavior,” says Jim Buczek, chief operations officer in the commercial division of SP Plus, a Chicago-based parking company with 350 locations here. “People are looking for new ways to purchase parking.”     

SP Plus, which was known as Standard Parking until 2013, has bounced back from the depths of 2020. The firm, which has garages across North America, reported net income of $13.7 million in the first half of 2021, vs. a net loss of $85.4 million a year earlier. Its share price has nearly doubled since bottoming out in July 2020.

The summer was especially strong for some parking garages as more people drove into the city to shop, attend events and visit tourist attractions. Memorial Day weekend was “fantastic,” and business over some summer weekends exceeded 2019 volumes, Buczek says. When the city reopened fully on June 11, Millennium Garages, the international joint venture that owns the garages under the lakefront parks, experienced an immediate jump in business, says Millennium Garages CEO Jim West.

West has noticed a pickup in online business and sales of daily passes this year, but sales of monthly passes are still only about 55% of 2019 levels, he says. If you are only going to be in the office Tuesday, Wednesday and Thursday, why pay for the entire month?

Though this year’s results will fall well short of 2019—Millennium Garages’ total occupancy in August was about 75% of August 2019—they’ll come out ahead of last year, and the momentum is moving in the right direction, West says.

“We’re exiting 2021 in a pretty good place,” he says. “I am far more optimistic than I was three to four months ago.”

Still, he’s careful about predicting the future.

“This is COVID. There are lots of factors at work,” West says. “The question is what’s transitory vs. permanent. No one can say what’s permanent.”

The downtown parking garage looked vulnerable even before the pandemic, as ride-hailing apps like Uber and Lyft became more popular and driverless cars seemed to be on the horizon. If people didn’t need their own cars to get around, why would they need a parking spot?

Those predictions may still pan out in the long run, but people prefer to drive themselves in a pandemic. Hotel guests depended heavily on ride-hailing companies to get around pre-COVID: Guests in about 10% of occupied rooms at downtown hotels served by SP Plus parked a car during their stay, Buczek says. Now guests with cars account for about 20% of occupied rooms.

More city residents are using cars, too. At downtown apartment buildings with SP Plus garages, the number of cars per unit has jumped 10% since the beginning of the pandemic, Buczek says.

But the future of the Chicago office market remains the biggest question facing garage owners and operators. If more companies with downtown offices allow their employees to work remotely or on a hybrid schedule, that will make it harder for downtown parking garages to recover from the pandemic—even if a lot of them commute by car rather than train or bus.

Parking companies are encouraged that more downtown professionals are coming into the office, but the numbers are still well below what they expected a few months ago, before the delta variant derailed many companies’ return-to-office plans. Downtown Chicago office buildings were 30.7% full as of Sept. 22, up from a low of 9.4% in April 2020, according to Kastle, which gathers its data from tenant keycard swipes.

It’s unclear whether the worker occupancy rate will ever rise back to 99.6%, where it was in early March 2020. But the number should rise further as the current surge in delta cases eases and more companies call their employees back to the office.

John Hammerschlag, president of Hammerschlag & Co., a Chicago-based owner of parking garages, is feeling better about the downtown market. More cars have been pulling into a 1,168-stall garage the firm owns at Madison and Wells streets in the Loop.  

“We haven’t filled it yet to capacity, but it’s certainly doing a lot better than it was six months ago,” he says. The market “is weak, but it’s coming back.”

?s=96&d=mm&r=g

Related Articles

Stay Connected

0FansLike
2,994FollowersFollow
0SubscribersSubscribe
- Advertisement -spot_img

Latest Articles