Gregg Reuben, CEO and founder of parking lot owner and operator Centerpark, credited the first company he started when he was 19 and a student at UCLA for his 30-year career. For a gig hosting a weekend car show, he rented a 100,000 square foot space on a development site off Interstate 405 in Los Angeles and turned it into a public parking lot during the week when not needed for the event.
It was a risk because no one knew “if there was a need for parking,” Reuben said in an interview. “It became a hit. During the week we filled the lot. This really sets the theme for my business going forward: you want to have as much control over your underlying property as possible. You want to diversify your revenue and maximizing usage. Over the next 30 years, that will become my theme.
Fast forward, after stints with what he said were America’s three largest parking lot operators – ABM Parking, Laz Parking and SP Plus – graduating from Harvard Business School, and founding another management company parking lot before selling it, now Centerpark is his answer to applying everything he’s learned to capitalize on what he calls a “niche” space in New York City. He also sees similar opportunities in other hub cities, including Boston and Washington, D.C.
Reuben is bullish on parking despite a drop in ridership as more people work from home and shop online, reducing the need to travel to urban centers.
“I started Centerpark with the intention of building a business that is primarily focused on real estate ownership,” Reuben told CoStar News. He adds that he learned working for these parking companies that most owners don’t operate and that there are “very few” who both own and operate. “There is a misalignment of interests between operators and owners.”
Here’s the supply and demand formula behind parking in the heart of New York: From 2015 to 2022, the number of off-street parking lots and licensed garages in Manhattan has declined by more than 14%, while vehicles registered to households have increased. more than 27% during the same period, according to Reuben.
“There continues to be a significant loss of parking in Manhattan as vehicle ownership and use continues to grow,” he said.
Against this backdrop, Centerpark spent approximately $100 million to purchase a portfolio of 20 parking properties, primarily in or around midtown Manhattan. This includes the recent purchase of two parking condominiums totaling 40,000 sq. units. residential tower, respectively – from Muss Development for $8.25 million.
Icon Parking leases and operates space at both properties, with Centerpark becoming the operator after Icon’s lease at one of the properties expires next year. Icon still has 15 years left in his lease on the other property.
Centerpark is still actively seeking and expects to have 25 or 26 properties by the end of the year, Reuben said. He declined to identify his source of funding, except to say that one of his former Harvard professors is an investor and also sits on the company’s advisory board.
“We believe the parking fundamentals in Manhattan remain strong,” he said. “It is unlike any other market. When you look at demand versus supply, it’s very unique. … The challenge for anyone else is that it’s an esoteric asset class. This requires specific industry knowledge.
Even though data shows that only about two-fifths of New York City employees have returned to their desks, the Centerpark study citing various research shows that the total number of vehicles entering Manhattan has returned to pre-pandemic levels while that safety and other concerns reduce transit ridership.
A case in point: The number of cars in Manhattan’s Centerpark garages was up about 10% last year from pre-pandemic levels in 2019, Reuben told CoStar.
Reuben admits there are market challenges. On the one hand, supply is an issue. “There aren’t a lot of buying opportunities,” he said, adding that there were only more than 1,050 parking lots in Manhattan compared to 60,000 buildings. Centerpark often proactively contacts sellers, many of whom have “multi-generational ownership,” he said.
Then there are traffic jams.
“The biggest threat to the industry is slow traffic,” he said. “Congestion is our biggest threat. … The convenience of driving and parking in Manhattan is at the heart of our value proposition. Congestion can deteriorate this part of the parking proposal.
Meanwhile, despite inbound traffic recovering after the pandemic, there have actually been fewer cars entering Manhattan over the past decade, according to Reuben. Still, he believes there are “significant opportunities for growth”.
“There are always challenges in the market. We see it more as a contrarian strategy,” Reuben said. “We identify properties where we believe we still have the opportunity to improve performance by owning and operating them. … We invest heavily in technology. Car park [operators] slow to adopt the technology. They have been slow to take sophisticated approaches to parking.
Centerpark is one of the first companies in the industry to create and use mobile booking functionality, he said, adding that it is also continuing its “technology efforts” including ticketless transactions and digital payments.
As the owner of parking properties, Centerpark has also created spaces for other uses, including self-storage, restaurants, gyms and newsstands, according to Reuben. The company said it has developed a full-service private parking condominium at 301 E. 69th St., where spaces sell for at least $199,000 each.
“It’s an advantage to be an owner-operator,” said Reuben, whose penchant for entrepreneurship dates back to age 7, when he was delivering newspapers. “We are profitable. Our investors are happy.