Embed Size (px)
Citation preview
Shopping Centre Car Parks:
Adding Value to the Retail
Experience
Regional Variations Revealed
Achieving Success in a Shrinking Market
Why Customer Experience is Critical
2 On Point • Shopping Centre Car Park Survey • December 2011
Introduction
The 2011 Jones Lang LaSalle Shopping Centre Car Park Survey
analysed the performance of 113 shopping centres across Great
Britain, with the aim of assessing how these facilities have fared
over the past year. We examined regional variations, tariffs &
turnaround, technological improvements and overall revenue
generated. We also considered how centres need to adapt and
develop their car parks to make them work harder in an ever
more demanding retail environment.
Car parks, like the retailers they serve, are inextricably linked to
the current economic downturn, and suffer the same consumer
spending pressures.
To understand the importance of car parking as a revenue
stream to shopping centres, we began with an analysis of
revenue generation, as shown in Figure 1 below.
48 shopping centre car parks are operated by the Landlord, who
receives the income directly. 15 car parks are operated by third
party specialist management companies (including NCP, Euro
Car Parks and APOCA), with the landlord receiving all net
revenue, minus operating costs and fees.
A surprising 37 centres generate no Landlord revenue
whatsoever. Of this total, 14 centres offer free parking, and 10
centres have car parks situated outside the Landlord’s demise
(either the local authority or a supermarket retaining ownership).
Centres where the car parks are let on a long lease with FRI (Full
Repairing and Insuring) terms are not included in the survey.
Car park performance can also be shown to vary by region,
influenced by the availability of public transport, prevalence of car
ownership and density of population.
Figure 1: Income Generated for Landlord Figure 2: Regional Map
42%
13%
34%
11% Landlord manages
car park and receives
direct income
Landlord receives
income after 3rd party
management costs
Landlord receives no
income
No car park attached
to centre
Table 1: Region Classification
Region 1 Region 3
Greater London - within the M25. South and South West, Wales, Midlands and East
Anglia – all areas North and West of ‘London and the
South East’, and South of ‘Northern England and
Scotland’.
Region 2 Region 4
The South East – area South of London and East of M3
motorway.
Northern England and Scotland – area North of
Cheshire, Derbyshire, Nottinghamshire and
Lincolnshire.
On Point • Shopping Centre Car Park Survey • December 2011 3
Key Findings
The survey highlights regional differences in a number of
different areas: Size of Car Park, Tariffs & Technology, Customer
Focus, and Performance.
Size of Car Park
The range of car parking spaces within the survey is from 165 –
2,774 spaces. The average shopping centre within the survey
has 923 car parking spaces. Region 2 has the largest car parks,
averaging 1,227 per spaces per centre.
Tariffs & Technology
Greater London has the highest tariffs, in excess of £1.20 per
hour; reflective of the increased average running costs of £670
per space. On average, the last change to tariff rates was in
2010, which suggests that Landlords have absorbed the January
2011 VAT increase.
86% of centre car parks have upgraded to Pay on Foot machines
instead of the old Pay & Display. Pay on Foot machines are
more customer-friendly and allow the Landlord to receive
payments directly into their bank account (where credit cards are
accepted), reducing the risk of revenue loss via third party
handling and manual transfers. However, the average age of
machines is six years, illustrating a potential for Landlords to
review their equipment needs. Greater London has the highest
presence of machines accepting credit cards.
Only 3 of the centres within the survey have the facility to charge
Electric Vehicles (EV’s). Region 1 has the highest presence of
charging points with 2 centres.
Customer Focus
The average shopping centre car park in the survey has 33
disabled car parking spaces; which amounts to approximately
3.5% of the total spaces available. Current guidance on disabled
parking requirements states that existing car parks should
provide 4% of spaces for the disabled, rising to 6% for new
facilities. 18 car parks (37%) exceeded the guideline provision.
The standard width of spaces surveyed is 2.4 metres, which may
be deemed inadequate for the rising numbers of 4x4s and MPVs.
Landlords may need to consider increasing the number of wider-
bay spaces to improve the customer experience.
Performance
The Cost to Income ratio measures the performance of total
running costs against gross income generated by the car park
and is thus a measure of efficiency. The lower the percentage,
the higher the level of efficiency.
With a ratio of 24%, Region 2 significantly out-performs the other
regions. This may be attributed to the higher volume of spaces,
more recent tariff changes, lower average running costs and high
average daily turnaround per space. The average daily
turnaround per space is 1.9 cars per space per day; however this
figure is significantly greater in Regions 1 and 2, with the average
daily turnaround of 2.4 per day. There is a direct correlation
between turnaround and revenue, which contributes to Region
2’s strong Cost to Income Ratio.
Table 2: Key Performance Indicators 2011 by Region
Car Park Performance Survey 2011
Region 1 Region 2 Region 3 Region 4 National
Average Number of Spaces 826 1,227 988 653 923
Average Number of Disabled Spaces per Car Park 24 43 42 23 33
Average % of Disabled Spaces per Car Park 3.30% 3.04% 3.60% 3.80% 3.44%
Average Tariff for 1st Hour £1.27 £1.22 £1.18 £1.02 £1.17
Average Income per Space pa (Net of Costs) (incl VAT) £876 £952 £705 £722 £813
Average Total Running Costs per Space pa (incl Rates) £670 £378 £420 £496 £491
Average Cost to Income Ratio (%) 43% 24% 36% 33% 34%
Revenue Received from 1 hour Stay 26% 36% 38% 24% 31%
Average Last Change in Tariff 2011 2010 2009 2010 2010
Average Daily Turnaround per space 2.40 2.40 2.06 1.61 2.10
% Pay on Foot as opposed to Pay & Display 100% 60% 93% 91% 86%
% Accept Credit Cards 68% 20% 23% 27% 34%
Average Age of Machines (years) 6 7 5 6 6
Provision for Electric Vehicle Charge Points 2 0 1 0 3
4 On Point • Shopping Centre Car Park Survey •December 2011
Actions & Considerations
How have car park owners and Landlords fared over the last
year? What actions should they be taking to ensure that one of
the most important gateways for their customers is pulling its
weight?
Prior to the economic downtown many car parks did not require
much assistance or focus – typically revenues year on year have
outpaced increases in operating and premises costs delivering
enhanced returns. Can this continue to be relied upon? Not so
says the 2011 survey data.
The 2011 survey reports a potential decrease in demand for
parking over the last year. Some regions are performing well,
however the national average daily turnaround per space is 2.1,
a reduction of 10% on the 2010 figure of 2.2. This is supported
within the BRC September Quarterly Trend Analysis; which has
identified over the past three years a drop of 1% in retail footfall
year on year1. In the current downturn, Landlords have resisted
raising tariffs with the majority making no changes in the last 3
years. 3% reported that they have actually reduced tariffs.
To add to the owner’s woes, operating and premises costs have
increased and are forecast to continue to do so with RPI now
over 5%.
So what can Landlords and owners do to improve performance?
We recommend starting with these 4 key questions:
1) Is the business being operated in the most efficient
manner?
The Cost to Income ratio is a useful guide to determine the
efficiency of the car park by analysing total running costs against
gross income. Focus on reviewing the 5 largest operating costs;
business rates, staffing requirements, utilities, maintenance and
cleaning. Consider also your parking payment system. If the
parking management is fully outsourced, alternative systems can
offer better in-house control over operating costs.
2) Is the correct pricing policy and marketing strategy in
place?
Consider promotional tariffs at times of weak demand or other
parking discounts jointly with retailers. Develop additional
revenue streams from advertising or evening/night time use by
nearby leisure or hotel use.
1 Extract from the British Retail Consortium Quarterly
Trend Analysis: September 2011
3) Is the parking environment the best it can be?
Focus on security, good lighting and cleanliness. Does the car
park have Park Mark Safer Parking Award status which gives
confidence to customers and acts as a security deterrent?
4) Is there a constant focus on initiatives and innovation to
address future threats and opportunities?
Read reports like this one to keep up to date with trends and
predictions. Be aware of your competition and the latest
technological developments and service initiatives.
Figure 3: Average Parking Spaces per Region
826
1,227
988
653
Region 1
Region 2
Region 4
Region 3
826
1,227
988
653
Region 1
Region 2
Region 4
Region 3
Figure 4: Breakdown of Expenditure
Rates
Cleaning
Security
61%23%
16%
On Point • Shopping Centre Car Park Survey • December 2011 5
The Future
We identified in the 2010 report the need for Landlords to inject
capital into their car parks in order to keep in touch with
technological advances, demographic change and the flight
towards ‘green’ travel over the next decade.
As we move further in to uncertain retail times, the requirement to
future-proof is not just about innovation but the need to promote
customer retention and improve the all round shopping
experience.
Consider car usage itself. The fluctuating price of oil and
increasing cost of car ownership is certain to have an impact,
particularly in the immediate future as global economic pressures
increase. The daily turnaround per car parking space has
decreased by 10% in just 12 months. Department of Transport
statistics tell us that the number of newly-registered vehicles has
begun to plateau.
With no foreseeable increase in volume ahead, Landlords must
act now to make the shopping centre car park experience a
positive one. Car parks are typically the first and last points of
contact for the shopper, yet too often the process can be a
source of frustration. A positive experience is vital to create the
right impression.
We have identified three core functions the car park needs to
perform to achieve this - and the technology and innovations that
can help facilitate the improved experience into the future:
1) Make it Easy to Pay
There are many new systems which offer advantages in terms of
speed and an improved cash-lite customer experience.
NFC (Near Field Communication) technology allows customers
to ‘wave and pay’ on exit, reducing the need for both parties to
handle cash. Such methods are increasingly widely used, with
banks such as Barclays now offering credit/debit card accounts
that utilise the technology, and an increasing number of mobile
phone handsets now being NFC enabled.
Other ‘Pay as you go’ systems completely remove on-site
payment barriers. Mobile phones can be used via systems such
as Verrus which allow customers to report their location and
duration of stay through a call or text, and then have their pre-
registered bank account debited. Automatic Number Plate
Recognition (ANPR) systems, already utilised in airports,
motorway services and rail stations have the same effect and
may one day be commonplace in shopping centre car parks too if
installation costs reach commercially viable levels on this smaller
scale.
2) Make it Easy to Park
LED guidance and bay monitoring systems improve traffic flow by
alerting customers to empty spaces with lights above individual
bays, reducing bottlenecks and increasing the speed at which
customers can park. The Bentall Centre in Kingston-upon-
Thames reported a 20% increase in usage and revenues
following the installation of this type of system.
3) Make the Car Park a Service in Itself
In future, we will see Landlords investing in branding and treating
the car park as a valuable part of their shopping centre
experience. Knowledgeable, service-orientated staff will guide
shoppers to their destinations and flag up revenue generating
extras such as valet servicing. Some larger centres already
provide advance traffic warning with regards to popular routes
out of the area. The ever-increasing ‘green’ agenda will mean the
provision of better recycling facilities, and more dedicated spaces
for National Car Share schemes and Electronic Vehicles, in line
with the governments Climate Committee aim for 1.7 million
electric cars on UK roads by 2020.
Conclusion
With Government initiatives to reduce car usage and improve
public transport, plus a levelling out of new car registrations and
rising costs of car ownership, car park owners can not
realistically expect to grow their business through volume
increases. Whilst professional management and stringent
financial controls remain vitally important, it seems clear that a
focus on customer satisfaction and retention is the key to future
success.
The growing demand for superior customer service in all aspects
of daily life coupled with continuing technological advances
provide an opportunity for forward-thinking centres to transform
and thrive in even the most demanding of economic
environments.
Jones Lang LaSalle Office
London
40 Bank Street
Canary Wharf
London
E14 5EG
+44 (0)20 3147 6040
For further details please contact:
Catherine Lambert
Chairman of Retail Management
London
+44 (0)20 3147 1263
Richard Davies
Lead Director
Shopping Centre Management
London
+44 (0)20 3147 1501
[email protected] .com
John Michell
Lead Director
Shopping Centre Management
London
+44 (0)20 7087 5573
Jeremy Bailey
National Director & Car Park Specialist
Business Rates
Berkeley Square
Bristol
+44 (0)117 930 5708
Stephen Daniels
Property Manager
Shopping Centre Management
London
+44 (0)20 3147 1261
Laurence White
Surveying Executive
Shopping Centre Management
London
+44 (0)20 3147 1157
Shopping Centre Car Park Survey – December 2011
OnPoint reports from Jones Lang LaSalle include quarterly and annual highlights of real estate activity, performance and specialised
surveys and forecasts that uncover emerging trends.
www.joneslanglasalle.co.uk
COPYRIGHT © JONES LANG LASALLE IP, INC. 2009. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without prior written consent of
Jones Lang LaSalle. It is based on material that we believe to be reliable. Whilst every effort has been made to ensure its accuracy, we cannot offer any warranty that it contains no factual errors. We
would like to be told of any such errors in order to correct them.
