The Parking sector in Spain is proving very dynamic in terms of takeover operations and concession tendering, due to the prospects of high revenues and profitability in the coming years. After a difficult period during the economic crisis, the sector has started a sustained recovery with increases in occupancy rates and revenues per parking place.
The sector trend will be determined by the evolution of the uncertainties and challenges linked with the business variables:
Increased parking fees as the main lever for the effective reduction of urban traffic
The major European cities have been working for years on defining sustainable mobility policies aimed at reducing urban traffic and thus improving environmental quality. However, the impact of these policies is insufficient, as has been seen recently in cases such as Madrid, Milan and Paris, where additional traffic-restriction policies have had to be introduced.
In this context, an increase in parking fees appears to be a real lever that can discourage the use of private vehicles, and there is a substantial margin for increase compared with other cities leading the way in sustainable mobility.
Renewal of existing contracts
The operating contracts for today’s new carparks have been structured as concessions in which the operators assume the construction investment.
Once the first concession agreement expires, the city council will be able to renew it either as a new concession with demand risk, receiving an advance payment from the operator (an up-front fee or a similar scheme), or as a management contract, so that the council benefits from all the revenues generated and is able to freely manage the fee policy in accordance with the city’s needs (in the same way that on-street parking is managed).
The carpark sector offers good future prospects. The evolution of the sector will depend closely on future mobility policies, changes in operating contracts and the incorporation of new technologies.
Digital transformation of the sector
The future will see the development of new ways of operating assets – reducing costs – as well as new types of interaction with the client. Potentially, this could also be accompanied by the arrival of new disruptive models, as has happened in other sectors (Uber, Blablacar, Airbnb, etc). A small number of such initiatives have already appeared, but so far have had limited success. However, this doesn’t mean that the carpark sector will be unaffected by these types of new models.
These uncertainties won’t be resolved in the same way for all carparks, because the many players in the sector have different views regarding carpark management and are likely to define different scenarios in different cities.
We will keep a close track of the trends and developments in the sector.