Boosting a property's NOI with parking, without compromises

What on earth is NOI?

NOI, or Net Operating Income, is one of the most important measures of a property's success. In practice, it means net operating profit — how much money the property generates from its actual operations before financing and taxes.

NOI is central because it's used to determine the value of the property. In the real estate market, the goal is almost always to increase value, so NOI has a direct impact on the owner's bottom line.

Even though parking is, by nature, a function that serves the rest of the property rather than being a goal in itself, it's often a significant source of revenue. For example, at large business parks, parking can generate as much as €500,000–1,000,000 a year. That's why there's almost always room to optimize parking from an NOI perspective.

At the same time, it's important to remember one thing. Because parking supports the property's core operations, it should never be optimized in isolation from the whole. Blindly maximizing parking revenue easily eats into rental income, weakens competitiveness, and lowers tenant satisfaction.

The good news is that parking has several levers that can raise NOI without compromises. Done right, parking improves a property's appeal while also being a significant source of revenue.

Here are four concrete ways worth pursuing the benefits of.

1. Increasing parking capacity

This doesn't mean building new parking areas or painting spaces closer together. In more than half of properties, parking capacity is underused because spaces are sold as named or company-specific.

When every space is named, the sellable capacity is always the same as the number of spaces. In reality, though, parking utilization is often only around 60–70%, even at peak times. So there's constantly unused space that you can't take advantage of, because all the spaces have already been sold as named ones.

The solution is switching to a parking-rights model.

When named spaces are converted into parking rights, the sellable capacity immediately grows by tens of percent. This is what's called overbooking, where more parking rights are sold than there are physical spaces.

This creates new inventory to sell, improves the property's competitiveness, and makes parking work better. Parking spaces are a strong currency in the real estate market. Whoever can offer more spaces does better in that particular micro-location.

Even if you don't use the new capacity to attract new tenants, you can offer it to existing ones. Better availability is always seen as added value. The user experience improves too, since drivers no longer need to hunt for their own named space and can instead park in any available allowed spot.

An example illustrates the difference.

If a property has 150 spaces, switching to a parking-rights model typically allows about 40–50 additional rights to be sold. Instead of 150 named spaces, there are then about 200 parking rights for sale. At €100 per right per month, that's €4,000–5,000 more in NOI every month, while the property's competitiveness improves at the same time.

2. Over-parking and pay-as-you-go

Flexible parking rights also enable new revenue models that benefit both tenants and the property owner.

One of these is allowing over-parking. In practice, this means a tenant pays for, say, ten parking rights per month, but can, when needed, park with more cars at the same time.

Over-parking is usually priced higher than the monthly rate. Tenants are happy to pay a premium for flexibility, especially when their parking needs vary. The model suits companies that regularly have visitors or staff from other locations, but not often enough to justify acquiring their own parking rights.

One form of over-parking is the pay-as-you-go model. Here the tenant has no monthly-fee rights at all; instead, each parking event is billed based on actual, hourly usage as part of normal invoicing.

This model has become more common especially since the COVID pandemic, as office use has become uneven and in-office days vary a lot.

3. Charging for short-term parking

Charging for parking is a strong, ongoing trend. Behind it are urbanization, rising construction costs, and growing return requirements in the real estate market.

More and more municipalities, offices, business parks, shopping centers, retail properties, hospitals, and hotels are making parking paid. The goal isn't just to create a new revenue stream, but also better management of parking.

The revenue potential of short-term parking depends on a property's occupancy, but for example, at office properties, visitor parking can generate €50,000–100,000 a year. That's revenue that directly grows NOI.

Charging for parking isn't a black-and-white decision, though. Pricing involves several choices. How much does parking cost per unit of time? Is there free time at the start? Does the price change with the duration of parking? Are special rates offered to certain user groups?

The most important thing is finding a balance. Pricing shouldn't weaken the property's competitiveness, but revenue potential shouldn't be left unused either.

4. Selling off underused hours

Parking utilization varies a lot by time of day and day of week. At business parks and offices, peak demand is typically concentrated in the middle of weekdays, especially between 11 a.m. and 2 p.m. In the mornings, evenings, and on weekends, these areas are often nearly empty.

Once parking rights for core users have been successfully overbooked, these underused hours can be sold to outsiders.

This works especially well if the property's surroundings have housing or other activity, such as sports halls, event venues, or services, whose parking needs occur at different times than office use.

Heated parking garages in particular are in high demand, for example for resident parking, and often offer significant additional revenue potential.