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KKR Bets on Travel With Strategic Acquisition of The Parking Spot
KKR is betting on US travel growth by acquiring The Parking Spot to capitalize on growing travel demand and expansion opportunities.
Jordan B. & Han-Gwon Lung
October 10, 2024
Together with
Good morning. We’re starting off a bit late with today’s newsletter due to Hurricane Milton impacting our Florida-based team. Our thoughts and prayers go out to everyone who has been impacted by this storm.
Today’s issue is brought to you by AirGarage.
🎙️ Listen Now: In this episode of No Cap by CRE Daily, hosts Jack Stone and Alex Gornik sit down with Aleksandr Gampel, Co-Founder of Cuby, to explore how Cuby is revolutionizing the construction industry.
Market Snapshot
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INVESTMENT SALES
KKR's Makes Strategic Acquisition of The Parking Spot
KKR, a global investment firm, recently acquired The Parking Spot, the largest operator of near-airport parking lots in the US, from Green Courte Partners.
Growth opportunity: Since Green Courte Partners bought The Parking Spot in 2011 for $360M, the operator expanded its portfolio from 17 to 47 properties, including the recent purchase of Park 'N Fly. This growth, driven by acquisitions, positions the company for more expansion.
Passenger records: In June 2024, US airlines saw a record-breaking month with nearly 90M passengers, showcasing the travel industry's strong recovery. This surge in passenger traffic indicates a positive outlook for travel-related services.
Hotel demand: This summer, post-pandemic cabin fever reached its peak, with hotel demand spiking up to 390M room nights booked between Memorial Day and Labor Day—one of the top three summer periods as far back as 2000.
Leveraging resources: KKR (KKR) plans to leverage its resources to accelerate growth opportunities for The Parking Spot. The company's brand strength and track record position it well for further expansion and enhanced services.
➥ THE TAKEAWAY
Market resilience: Despite urban redevelopment projects reducing city center parking spaces, near-airport parking remains essential for travelers. KKR recognizes substantial growth potential in this segment, especially with increasing travel demand.
TOGETHER WITH AIRGARAGE
How The Space Force Automates Parking Enforcement — The Right Way
Enforcement is key to maximizing revenue at your parking facility. This means ensuring that everyone who parks is either paying to park or is validated for free parking.
On day one, AirGarage brings in the Space Force, our comprehensive enforcement program. The Space Force comprises on-the-ground staff, license plate reading cameras, and automated ticket mailing. All three pillars work together to ensure near-perfect compliance at your parking property while minimizing expenses.
Parking Enforcement: The Old Way
LPR Cameras: Many parking operators use license plate reading cameras to track vehicles entering and exiting a facility. They indiscriminately mail tickets to any plate that passes by the camera, even if the vehicle was there for less than 5 minutes to pick up someone or turn around after realizing the facility is full. This leads to one-star Google reviews, complaints to the BBB, and drivers who avoid the facility.
Parking Gates: Sometimes, asset owners invest $100k or more in gate systems to try to automate them. This leads to perpetual maintenance expenses, staffing costs, and remote call center operations costs since the gates break, card readers fail, and drivers forget their wallets or tickets. Drivers get bottlenecked at the gate, leading to backups and a poor experience.
Parking Enforcement: The Right Way
AirGarage has implemented the Space Force enforcement protocol across hundreds of properties. In nearly all cases, it has led to an uplift in online reviews, increased revenue, and decreased expenses. The key pillars of the Space Force enforcement system are:
License plate reading cameras that track occupancy and notify on-the-ground staff to enforce at optimal times.
On-the-ground staff who issue physical tickets and check property conditions regularly.
Ticket mailing to drivers who happen to park between enforcement sweeps. Instead of indiscriminately mailing tickets, AirGarage filters out drivers who exit within the grace period.
Aside from automated enforcement, AirGarage brings a full suite of technology to your facility, including dynamic pricing.
The average property owner who switches to AirGarage from a legacy parking operator sees a 23% increase in NOI in the first year.
Talk to AirGarage today and let us show you how we can increase your NOI with a custom proposal for your parking facility.
*Please see the advertising disclosure at the bottom of this newsletter.
✍️ Editor’s Picks
Office space shuffle: Manhattan sees significant office-to-residential conversions, removing over 6.5MSF in 4 years, with more expected amid oversupply.
Storm-proof strategies: Hurricane Milton threatens $1.1T in FL CRE, with 235K properties at risk of 50+ mph winds, expecting $10B–$20B in insured losses.
Commercial freeze: CRE investment volumes across Los Angeles are down, with an 18.4% decrease in property sales compared to 2023.
Landlords soften: Commercial property owners are increasingly open to leasing their spaces to cannabis businesses amid high vacancy rates.
🏘️ MULTIFAMILY
Green rebates: California launched a new $80M rebate initiative to promote energy-efficient upgrades in homes, offering rebates up to $14K per unit.
Affordable expansion: Turner Impact Capital's Multifamily Fund III raised $750M, with 1.3K units acquired, the fund aims to invest in affordable housing communities.
Concession competition: Competition rises for US apartment owners, with 1 in 5 units now offering concessions as average occupancy drops slightly.
🏭 Industrial
Master the market: The US industrial real estate market is set to absorb 100 MSF by 2024 despite a 6.4% vacancy rate increase in Q3.
Phoenix goldmine: TA Realty acquired Chandler Airpark 202, a 400 KSF industrial park near Phoenix, for $75.6M cash.
🏬 RETAIL
MCB raises bid: MCB Real Estate has increased its takeover offer for Whitestone REIT (WSR) to $1.45B, with a $15 per share cash proposal after a previous bid was rejected.
Rent rescue: Sears Holding Corp (SHLDQ) seeks rent concessions from landlords for 11 remaining US stores, part of a drastic decline from 4K stores.
Silicon Valley scoop: Applied Materials (AMAT) acquired the former Fry's Electronics facility in Sunnyvale for $100M as part of a $400M acquisition spree.
🏢 OFFICE
Turnkey appeal: With office vacancies climbing, landlords are offering turnkey model suites to attract tenants by reducing setup costs and expediting leasing.
Sky-high loss: A Midtown Manhattan property sold on Ten-X for $8.5M, an eye-watering 97% drop from its last $332.5M sale price by UBS in 2006.
Boston upturn: The Boston office market showed a positive trend with over 1 MSF absorbed in the latest quarter, while vacancy remains high.
Trophy triumph: Morning Calm Management acquired the Miami office for $443M, ranking as Florida's second-largest deal. The office is located in a thriving market.
TOGETHER WITH AGORA
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Watch the webinar now and learn how to simplify your distributions with Agora’s waterfall automation tool.
*Please see the advertising disclosure at the bottom of this newsletter.
📈 CHART OF THE DAY
A picture can be worth a thousand words. That’s certainly the case with this takeaway from a recent Deloitte survey of commercial real estate decision-makers on their outlook for 2025.
It’s the first time since 2022 that CRE has been this optimistic about next-year revenues, with 88% of respondents confident their revenues will increase in 2025, 7% undecided, and just 5% worried about lower revenues.
Just one year ago, the outlook was very different, with only 34% of respondents feeling optimistic about higher revenues in 2024, 6% undecided, and 60% pessimistic. It’s a complete reversal and a strong sign of growing confidence across property sectors.
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