Parking: Investment opportunities post pandemic
We are seeing a resurgence in the parking sector following the pandemic and, in particular, where technology and space-matching collide.
Here are some questions we have helped investors answer in recent parking deals…
How is the online parking reservation market changing?
Landlords are seeing an opportunity to extract more value from their parking assets through digital solutions. There is now a clear trend towards digitalisation of car parks; growth in ANPR, pre-book and cashless payments are all underway. The pandemic accelerated the demand for digital parking solutions, speeding up the adoption of cashless (particularly mobile) payments, due to greater concern from customers around touching screens.
Furthermore, ever increasing adoption of connected vehicles will likely translate into more in-vehicle payments for parking (it is estimated that 40% of connected vehicles in Europe are forecast to possess this capability by 2025). Connected payments are those that can be made from within the car without the manual use of a smart device by the vehicle owner to complete the transaction. This provides motorists with an end-to-end parking solution – the ability to find and reserve parking spaces and pay on departure. As well as convenience for motorists, the trend is supported by the private and public sector as part of a wider effort to reduce congestion, pollution, parking management costs and parking abuse.
How fast will ANPR rollout be within private off-street car parks, and what impact will this have?
The use case for parking operators to switch to ANPR from physical hardware (e.g. kiosks, barriers etc.) is recognised and accepted across the industry with adoption increasing at pace. Evidence suggests this will result in a significant increase in the volume of penalty charge notices (PCNs) issued in the coming years. Planning applications for ANPR have been rising rapidly and this is expected to continue (and the vast majority are successful); penetration of ANPR within private parking sites is estimated to reach almost 60% by 2025.
What impact would penalty charge caps have on private parking operators?
The Parking Code of Practice was proposed in February 2022 to protect drivers from unfair private parking charges through a PCN price cap. Although this has been withdrawn, there is clear demand for change amongst motorists. Regulatory changes (such as price caps) could put further financial pressure on parking operators who often need to engage the small claims courts in order to enforce PCNs in any case. However, rapid switching to ANPR (as mentioned above) is likely to significantly increase PCN issuance, which should help to offset the threat posed. PCN volumes would also increase naturally if price caps were introduced; a smaller fee acting as a lower deterrent to contraventions.
What is the likely trajectory with respect to electric vehicles and how might this impact the parking industry?
Whilst EV uptake is currently low in the UK, it is forecast to increase significantly, and car park operators will have to respond to this change, primarily by installing EV charging infrastructure in car parks (in the longer term, some smaller operators may be left behind if an EV solution is not available). EVs are expected to make up an increasing proportion of new car registrations and be 4% of total car stock by 2026. Purchasing of EVs is seen as a key long-term driver of growth in pre-book due to the desire from EV owners to have access to charging points when parking.
Amongst other work in the parking market, Armstrong performed full commercial due diligence for Flowbird’s acquisition of YourParkingSpace in 2022, Armstrong supports Flowbird Group’s acquisition of YourParkingSpace
Please get in touch if you would like to discuss opportunities in the parking sector.
Jack Hibbs, Engagement ManagerEmail Jack