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Parking’s technology revolution

by Bill Smith

In recent years the parking industry has been transformed by the introduction of many new technologies that improve customer service and make parking assets more manageable and profitable. The industry is also in the midst of a wave of groundbreaking new technologies designed to integrate parking assets into “smart cities,” self-driving vehicles, and other innovations that will change the way we live.

These same technologies can provide valuable opportunities to investors. For those setting their sights on either on-street or off-street parking assets, technology should play a prominent role in the decision-making process. The presence, or lack, of technology could have a significant impact on the value of any deal.

“It’s important to look at what technology is currently in place,” says Dan Kupferman, director of car park management systems for Walker Parking Consultants. “Every deal that has gone through in recent years has been heavily impacted by technology.”

Kupferman says that when investors purchase parking assets, particularly parking facilities, one of their first moves is often to install automated revenue control technology, such as pay-on-foot or access and revenue control equipment that can accept credit cards. By automating their facilities, owners can save tens or even hundreds of thousands of dollars a year by reducing or eliminating staffing costs, making operations more efficient, and eliminating the risk of employee theft (a major concern for any cash-based business such as parking).

Similarly, Kupferman says that technology should play an important role in determining whether to partner with cities to lease on-street metered spaces from a city. Smart meters that accept credit cards can dramatically enhance the value of an investment in on-street parking assets. It may seem counterintuitive, but Kupferman recommends favoring assets that do not have technology installed already.

Parking technologies themselves also offer investment opportunities. Kupferman says that he sees a lot of investment money going into apps that allow parkers to reserve spaces, pay for parking, or identify where parking is available. But he warns investors to be cautious. Kupferman recommends seeking out apps with national reach, rather than those associated with particular hardware providers.

The rise of frictionless parking has made operational integration [between software and hardware] that much more important. Frictionless parking revolves around the idea of letting people in and out of parking structures without having to stop to pay on the way out. The systems rely on a variety of different technologies, including barcode readers, RFID technology, mag strip readers, and license plate recognition (LPR) equipment to recognize parkers’ credentials to permit entry and egress.

What does this trend mean for investors? Companies with technologies that work with other types of technologies should provide a better return to investors.

Parking is a $100 billion industry, and it presents numerous opportunities for investors who understand the landscape and the trends that will drive the industry over the next decade. The industry’s technology sector is leading the way, both in terms of introducing innovation and providing opportunities to investors.

Bill Smith is a principal at Smith Phillips Strategic Communications.

This is an abridged version of an article that appeared in the March 2017 issue of Real Assets Adviser.

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