Parking Insights 01/16
At the beginning of April 4, I took up the role of CEO of APCOA. I am really excited about this new task and the work with the excellent team of APCOA as well as our new CFO, Steffen Bätjer who already joined on March 1. And of course, I look very much forward to working with our current and future clients. Let me take the opportunity that provides our first newsletter to introduce ourselves to you.
Recently, Steffen Bätjer has served as CFO of Techem after a number of leading functions in the finance industry and as a consultant at McKinsey. I am very happy to have him on board and to be able to rely on his business, strategic and analytical skills.
I have been working for over 25 years in various international service companies amongst others Compass, Gate Group and Hertz. Although, none of those businesses are related to parking, all are characterized by a strong client and consumer focus and have comparable business models to APCOA. I am now bringing in all my experiences to APCOA which also allow me to quickly understand and further develop the company.
Parking management has become a very dynamic market. This environment offers numerous growth opportunities but also requires innovative solutions. With the realignment of APCOA in 2014, the solid performance in 2015 and the broad range of services offered, our company is well positioned to jointly utilize the market potential ahead. Together with you, we aim to exploit these future business opportunities.
What will the change in leadership at APCOA mean for you specifically? We will emphasize a high level of client and service orientation throughout the organization. In this context, we would like to intensify our dialogue with you, in order to better understand and serve your needs and requirements.
I look forward to a fruitful collaboration and we hope you enjoy reading the news on the topics of mobility, car park management and the asset class car parks which we put together on the following pages.
Philippe Op de Beeck
CEO APCOA PARKING Group
The market is worth billions, and it´s expanding - five indicators that point to further growth
How lucrative are investments in parking management? According to APCOA: Very. Here are five good reasons why the car parking business will continue its impressive growth.
As an asset class, car parks have always been seen as something of a niche product. And this is despite the fact that car park and parking space operators in Germany generate ten-digit revenues. Although there are no concrete figures, a 2012 study compiled by Quantum Immobilien AG – conservatively – estimated that the income from off-street parking spaces in Germany is €1.7 billion per year. And there are strong indications that the market in Germany is a long way from peaking. APCOA puts forward the following five arguments:
1.) Further growth in parking fees is to be expected.
Parking has a price. After all, the provision and management of parking spaces in both the public and private sectors requires investment in maintenance and infrastructure. These are facts that drivers are well aware of and have come to accept. For cities and municipalities, in particular for those where budgets have been squeezed, professional parking management offers an interesting and long-term income stream, and one which they can easily expand. That’s why the number of gratis parking spaces in central districts of major and medium-sized cities is in steady decline – and those that do still exist are normally only available for a set number of hours at a time.
If the introduction of parking fees was meant to make it easier for drivers to find suitable parking spaces, it hasn’t worked in many places. This can be interpreted as an indication that the market is ready for higher prices. In addition to on-street provision, extra off-street parking in multi-storey car parks is something no town can now do without. Within Berlin’s city limits alone – including airports and exhibition centres – there are around 180 multi-storey car parks providing approximately 70,000 car parking spaces. In most cases, it is difficult to identify any clear pricing strategies. Depending upon where a driver wants to park in Berlin-Mitte, they will have to pay between €5.50 and €24.00 for a day’s parking. This is another indicator of the fact that price potentials have not been fully exploited in all areas of the city. An international comparison confirms that parking fees in Germany remain relatively low.
2.) Demand for parking spaces is likely to increase. Demographical change, the environment and the explosion of online retail: It’s no surprise that there are various forecasts claiming that the number of cars on our city centre roads is going to decline steadily and continuously. As a result of these prophecies, there has been controversy surrounding any discussion of the long-term provision of parking facilities. One thing is crystal clear: Demand for parking spaces correlates directly with car ownership figures – which is exactly the conclusion reached by the Quantum study in 2012.
According to statistics published by the Ministry of Motor Vehicles, the number of cars in Germany continues to rise. As of January 1, 2016 the country had a stock of 45.1 million cars, 1.5 percent more than on the same date twelve months earlier. Last year alone, new vehicle registrations totalled 3.2 million cars, a massive 5.6 percent year-on-year increase.
More cars means more parking spaces. Cars spend most of the day – 23 hours according to Quantum – doing nothing. Suggestions that traffic levels would reduce as a result of environmental concerns or changing population trends have so far failed to materialise in the statistics. Counter trends, such as urbanisation and the increasing number of senior drivers, have the opposite effect. Increased immigration also appears to have scotched forecasts that Germany’s population was set for steady decline.
3.) As innovative mobility services emerge, parking facility operators have significant opportunities with new business models. So far there are no indications that mobility needs are reducing, they are simply being serviced by alternative means. For example, via car sharing: As of January 1, 2016, 1.26 million car-sharing users were registered across Germany: that is 220,000, or 21 percent, more than in the previous year. The number of electric vehicles is also sure to grow. Of the 3.2 million new vehicle registrations last year, only 12,300 were equipped with electric motors, but the number represents is a significant jump of 45 percent in just twelve months.
Both rising demand for car-sharing services and the growing number of electric vehicles on our roads can be viewed as extremely interesting developments for the parking management industry. After all, the fleets of car-sharing vehicles need a correspondingly large number of parking spaces in highly frequented areas. At the same time, electric vehicles need access to charging stations. Managed car parks are almost predestined to fulfil both of these requirements. All that is needed is for operators to develop appropriate and innovative business models.
4.) Only around half of Germany’s off-street parking facilities are currently managed by commercial operators. In 2012 there were 2.4 million off-street parking spaces in Germany for which usage fees were payable. But only 46 percent of these were being managed by specialised operators. And this is despite the fact that parking facility management has always been a classic market for outsourcing, especially as it calls for special expertise and normally falls outside the core business of the facility’s owner. Without the support of experts it will become more and more difficult to fully exploit the economic potentials of off-street parking.
5.) Car parks have an especially interesting risk/return profile. As an asset class, car parks offer yet another significant advantage:
They always generate income. Vacancies – such as those in the housing or office markets – are unknown in the industry. This is one of the main reasons why the Netherlands-based fund management company Bouwfonds has rated car parks as having a particularly good risk/return profile. This is especially true for facilities in central locations that are used by large numbers of drivers who are visiting attractions in the surrounding area, as opposed to those car parks that are tied to a single destination.
How digitalisation is changing parking
In many places today, the search for a parking space is both stressful and time-consuming. This presents parking management companies with the opportunity to turn over-stressed drivers into relieved and satisfied customers. Dr. Dietmar Geppert, Director Marketing & Sales at APCOA PARKING Holdings GmbH, explores how digitalisation offers innovative solutions to make it easier than ever to find vacant parking spaces.
About 40 percent of urban traffic is made up of drivers looking for spaces to park their cars. Before they even set out, nine out of ten drivers calculate their journey times to allow them enough time to find a parking space at their destination. Eight out of ten have to drive around the block multiple times before they find a parking space. In city centres it takes an average of 5 to 10 minutes to find a space. In total, urban drivers spend a many hours each year just on finding somewhere to park their cars.
The situation isn’t going to improve by itself. In fact, the opposite is true: Forecasts indicate that there will be further growth in mobility in our cities. Solutions are clearly required and in an age when people everywhere are talking about digital transformation, it’s natural that the following thought should arise: Could digitalisation not also help drivers looking for parking spaces?
There are a wide range of approaches that could be adopted and, in terms of what technology now offers, parking is on the cusp of a new and exciting era. Navigation systems can direct drivers to unclaimed parking spots and fully-automated off-road parking facilities will deliver unparalleled levels of comfort.
But anyone hoping to develop truly marketable solutions needs to start by focusing on the needs of customers and – above all – on their willingness to pay for higher levels of comfort and improved services. Valuable insights are provided by a recent study published by DHBW (Duale Hochschule Baden-Württemberg) study and commissioned by APCOA.
The scientists were tasked with determining to what extent drivers would be willing to pay for an improvement in the areas of “quality of life”, “stress reduction” and “free-time”. Almost 1000 people from a variety of social backgrounds between the ages of 17 and 65 were asked to comment.
The study’s findings reveal just how exhausting the search for a parking space can be. More than half of the drivers feel stressed when looking for a parking space. This is certainly due to the fact that about 50 percent are under time pressure in this situation and get angry when they can’t find an available nearby car park. Furthermore, more than a third of the drivers are getting nervous in their search for a space to park their car.
Based on their own estimates, the study’s respondents are generally open to the idea of paying increased fees for more convenient and comfortable parking solutions. Participants were also asked by the DHBW’s experts to list the factors they believe would justify higher parking fees. Half of the respondents said that a reserved parking space would be worth paying more for. 41 percent would dig deeper into their pockets if it meant they could park closer to their actual destination. Almost a third would pay more if they could have a wider parking space and guaranteed security. More than a quarter would be prepared to pay extra if they were provided with accurate details on available parking spaces.
In order to make parking a better experience, the DHBW market researchers suggest that parking facility managers should focus on comfort and convenience. Modern digital technologies offer new opportunities to create consumer focused services and products which emphasize on stress reduction and time saving as key features. The parking systems of the future will have to offer complete packages that combine a wide range of integrated services – from the moment a driver sets off to the moment they get back home. Drivers will have access to these services through an App or on-board navigation system in the car. Before they even start their journey, consumers will be able to reserve parking spaces in close proximity to their ultimate destinations. An integrated navigation system will reduce stress levels significantly, guiding them every step of the way to their parking space. Digital tickets will enable barrier-free access to off-road parking facilities. The navigation system will even guide drivers through the car park and directly to their reserved parking space. As they return to their vehicles, the system will also lend a helping hand.
Payments for these services will be processed electronically. All of this can only be made possible by extensive digital transformation on a scale beyond the scope of a single operator. Within the parking management industry there are already a multitude of systems being offered by a variety of operators. For a clear vision of the future you only need to look at other industries: concert tickets, hotel rooms and ancillary services have all been offered online for some time now. We are sure to see more complex solutions in the parking management sector, many of which will require cooperation and consolidation. One thing is certain: Digital transformation offers massive opportunities and enormous potentials in the parking management industry – both for car park operators and their customers.
Future Winners and Losers of Digitalised Mobility
On June 28, a large number of national and international experts came together to discuss the challenges raised by the future of mobility at the 3rd APCOA PARKING Mobility Summit under the banner “Disrupt or be Disrupted” in Berlin’s Adlon Hotel. As in the past year, the event once again delivered inspiring presentations and discussions and revealed who will be amongst the biggest winners and losers from the digitalisation of the transport industry.
The growing number of attendees at the APCOA PARKING Mobility Summit over the last few years shows: There is a great deal of demand for discussion within the mobility sector. “The summit serves as a platform for a much-needed dialogue among the industry's major participants,” said Philippe Op de Beeck, CEO of APCOA PARKING Group. “This is the only viable approach if we are to find common solutions to the broad range of economic and ecological challenges of urban mobility.”
At the top of the agenda were the topics digitalization and urbanization and their massive consequences for all market players in the transportation industry. The vision for the future: A quick glance at your smartphone or in-car navigation system and you know just where to find the nearest on- and off-street parking spaces. A simple tap on the screen and your nearby space is reserved. Electric car drivers, who now make up a large proportion of traffic, are allocated a space with a charging station.
What might sound like a farfetched idea will actually be commonplace in the next couple of years. In contrast, car drivers will be waiting up to ten years for fully-automated parking. These were among the expert predictions made by leading figures from the automotive and parking management industries at the 3rd APCOA PARKING Mobility Summit, in Berlin on 28 June, 2016. Gathering under the banner “Disrupt or be Disrupted”, international business representatives joined with eminent scientists and academics to discuss the challenges of mobility in response to the digitalisation of the automotive and parking management sectors. “One thing is certain: Parking facilities will change fundamentally in the very near future. Digitalisation is going to have a significant impact on both the automotive and parking management industries,” said Philippe Op de Beeck, CEO of the APCOA PARKING Group, Europe's leading parking manager.
Big Data is set to play an increasingly central role in these developments. Alex Israel, from Inrix Inc., presented a technical system that uses Big Data to generate forecasts of parking facility occupancy patterns. This will dramatically reduce the number of drivers circling the streets looking for parking spaces, traffic that currently makes up around 30% of all cars on the road in urban centres.
Dr. Rolf Nicodemus, Project Vice President, Connected Parking at the Robert Bosch GmbH, explored the concept of automated parking. Driverless parking is already possible in facilities with network connectivity, allowing space in car parks to be used 20% more efficiently. More and more cities are imposing limits on the number of cars allowed to enter their central districts as they look to reduce emissions, traffic volumes and noise levels. The proportion of paid parking spaces will increase as free parking facilities are reduced. At the same time, demand for parking assistance systems, automated car parks and intelligent driver assistance systems will grow in response, explained the futurologist Alexander Mankowsky. “It is already the case that nine out of ten drivers plan extra time into their journeys for finding a parking space at their destination.
This costs them between 10 and 30 minutes per car journey, depending on which city or neighbourhood they are in. All in all, this adds up to significant number of wasted days per year, just spent on finding parking spaces,” explained Dr. Dietmar Geppert, Director Marketing & Sales at APCOA PARKING Holdings GmbH. As a result, Geppert believes that drivers are now prepared to pay more for centrally located parking spaces. “As more and more parking spaces are networked, drivers will be able to use apps to select the parking spaces they want.
This will give more power to consumers and allow an increased number of ancillary services to be provided in future,” continued Geppert. What this range of ancillary services might look like in future was the subject of Op de Beeck's address: “Just a few years from now, the world will be very different. It will be hybrid and electric cars that fill our streets.” Today, one quarter of the new cars sold in Norway are electric vehicles. And a ban on the registration of new combustion engine cars from the year 2025 is being seriously considered in the Netherlands and Norway. “Car parks will become interesting sites for charging stations,” observed Op de Beeck. “Urbanisation and digitalisation are the two mega trends of our age. Although they present challenges, they also offer great possibilities for connected mobility. We have an amazing opportunity to elevate customer service and customer relations to an entirely new level,” said Op de Beeck.