the present “Great Recession” on con- sumer confidence and spoke of the phe- nomenon known as the wealth effect, which should be viewed as the key fac- tor or indicator of future business for the parking industry. He noted the actual numbers


underpinning the seriousness of the wealth effect factor are a 25% decline in “personal worth” and the real 17% rate of adults in the U.S. economy who are doing something other than what they were two years ago – either due to underemployment or outright unemployment. Recovery in these terms is simply


not in the cards for now, and statistical- ly measurable improvement in these indicators may not be seen until 2012- 13, Denda said. He added that not only is consumer


spending the dominant factor in the GDP, the discretionary part of that spending also is a dominant dynamic in daily activity outside the working lives of individuals. He said this translates to travel and other finan- cial outlays – all of


which are associated with vehicle use. This plays out, he


explained, both inmonthly occu- pancy rates in parking facilities and as a demand factor for expansion in the commercial real estate and institutional markets (new construction) – historical- ly the biggest areas of expansion for the parking industry. The message, Denda said, is that


while the parking industry grows on seemingly subtle statistical growth in the GDP, it also survives in “the absence of growth to a great extent by servicing underlying economic trans- actions and lifestyle activity simply associated with demographics.” Evidence of that comes in the form


of statistical tracking of two key meas- ures of industry health: parking revenue (operating income) and parking garage construction.While both show appre- ciable declines, Denda said, careful measurement of each also holds some reason for confidence that: (a) industry revenue will not see


precipitous decline but rather modest fall-off comparable to recent histori- cal episodes; (b) due directly to revenue short- falls, expansion is occurring of the pub-


lic sector, revenue-producing base (off- street parking expansion, new planned public garages); These assessments explain to a cer-


tain extent the relatively normal rate of purchase/procurement of equipment/ technology seen over the past nine months, the industry researcher noted. Therewas even a surprise, if only a


modest one, coming out of the private sector, Denda said: The garage con- struction forecast shows nearly a 5 per- centage point uptick in private, com- mercial garage construction (propor- tionatemarket share) in themid-term. The latter is particularly interest-


ing, he said in his PIE presentation. “Financial liquidity issues rest at the core of the present Great Recession – and there is further cause for concern given a looming commercial real estate crisis that bears an uncomfortable resemblance to enfant terrible of the past 18 months: resi- dential mortgage rate resets.


“Despite


these issues,” Denda said, “a cer- tain margin of growth based on changes in demographics and facility replacement requirements will occur in an economy as big as


ours in the United States.” “An interesting corollary in the


form of evidence for this fundamental reality,” he said, “is the fact that the cur- rent geographic distribution of announced garage starts over the next 9 to 18 months tracks very closely with the 2002 – post-dotcomand 9/11 down- turn –market.” In wrapping up, Denda talked


about prospects of federal stimulus funding and its effect on the parking industry. He struck a cautionary note. Expectations for targeted federal


aid in any one sector – let alone a single project or program – were and remain entirely exaggerated, he said. “Federal funding is not the answer to replace lost commercial transactions, because it simply is being spread too thin inmulti- ple areas of our economy.” But in that stimulus dynamic


resides a benefit, he said. “If the park- ing industry is, in fact, so widely based, even the generalized effect of sustain- ing a multitude of state and local


backed activities, including increasedmar- ginal employment, cannot be ignored by the industry. “In fact,” Den-


da said, “direct finan- cial aid to local jurisdic- tions can also be seen to have positive effect in that federal funding inevitably off-sets local monies in governments


and agen- cies other- wise lost in the


recession.” The bottom line


of Denda’s PIE presenta- tion basically responded to the question of his topic: Is the parking industry, as we knew it, gone? The answer, his interpretation of the data indicates, is an emphatic no.


Dale Denda, Director of Research at the Parking Market Research Co., can be reached at ddenda@parkingresearch.com.


PT


MAY 2010 • PARKING TODAY • www.parkingtoday.com 65 See us at the IPI booth #717


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