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. Last Updated: 07/27/2016

Creative Parking Stunts Development of Garages

For MTThe Golutvinsky Dvor garage is profitable because it's in an area with no other parking.
Though in many ways the ballooning number of cars in Moscow is a symbol of the capital's prosperity, it is simultaneously an albatross around its neck.

In the past 10 years, the city's cars tripled in number from 800,000 to 2.2 million. Some put the total closer to 2.5 million or 3 million, to include the non-Muscovites who commute into the city.

City Hall estimates the capital has 787,000 parking spaces -- including multistory garages, surface lots and rakushki, or the metal boxes that line most courtyards -- which means for every one car parked in a designated parking space, two cars are not.

While officially this indicates an acute parking shortage, there is none in practice as drivers avail themselves of the empty space on the city's roads and sidewalks. Even in densely packed areas downtown, only on the busiest streets, like Tverskaya Ulitsa and Novy Arbat, are parking restrictions enforced.

Where street parking is more difficult to come by, greater demand and the resulting potential for profit makes constructing a parking garage -- usually low on a real estate developer's listof priorities -- more attractive.

Moscow has gained an average of 53,000 new parking spots per year since 1996 for a total cost of 19 billion rubles ($600 million), according to City Hall data. The city government plans to accelerate the pace to 70,000 new spots per year through 2004, for a targeted total of 927,000. By 2020, City Hall hopes for total parking capacity of 2 million.

To meet such lofty goals, the city badly needs more parking garages. However, developers often prefer more glamorous projects, said Tom Wiseman-Clarke, head of property investment and sales at Stiles & Riabokobylko, the local affiliate of Cushman & Wakefield Healey & Baker. "They are expensive to build, and you don't really get returns on your investment," Wiseman-Clarke said of garages.

An exception to that is the Golutvinsky Dvor development on Yakimanskaya Naberezhnaya, which includes a profitable free-standing multistory garage with spaces for 470 cars. "It's successful because there is no parking in that area and no room for parking along the streets," said Jack Kelleher, managing director of Noble Gibbons, the local affiliate of CB Richard Ellis.

Parking attached to apartment buildings is another exception to the unprofitability rule, said Yulia Nikulicheva, senior research analyst at Jones Lang LaSalle, because spaces are sold by developers to tenants for a large profit. Spaces in residential buildings' garages downtown start at $40,000, she said.

Parking attached to office space is leased to tenants by the month, usually at no more than its cost to the developer, as a package deal perk. When adjacent to a retail center, such as the Atrium Mall near the Kursky Station, customers pay a low hourly rate for parking, subsidized by retailers.

City Hall mandates that developers bundle parking facilities with any commercial space they build. One parking space must be provided for every 20 square meters of retail floor space, and for class A office buildings, one per every 100 square meters of rentable space.

On average, one out of every dozen employees in a given workplace is entitled to a space. And for the privilege, the lucky individual pays an average of $250 per month, estimated Erkan Erkek, marketing director of Enka, a Turkish real estate and construction company.

The usual pattern is to build one to two floors underground, which may meet the needs of tenants, but does not add net parking to the city's infrastructure, said Noble Gibbons' Kelleher.

Parking garage layouts require approximately 30 square meters per parking space. Using the estimate that each square meter in a stand-alone, multistory garage costs on average $175, one level with 100 spots in that garage would cost $525,000 to build. If that 100-spot level were built underground, the construction price tag would jump to $750,000.

Keep in mind that each level of underground parking is approximately twice as expensive as the previous level, which explains why developers rarely build down more than two or three stories, especially when they have the additional headache of contending with underground utility lines and metro tunnels, Wiseman-Clarke said.

Beyond that, developers looking to make a profit face competition from abundant -- and free -- street parking.

When drivers can leave their car almost anywhere, there is little incentive to pay for parking. "Russians' first instinct is to find a free spot on the sidewalk and drop the car there, and they do that because they can," Kelleher said.

"One of the struggles of any developer is that they need the support, cooperation and coordination of the city to make parking facilities profitable," he said. "The city must enforce no-parking restrictions and push cars off the streets into garages."

One solution is to make parking infrastructure more user-friendly, Kelleher said. For example, "there's a hell of a lot of parking under Smolensky Passazh, but to get there, you have to drive around the building, through a narrow alley along which cars are double parked, and you can't see the entrance. It is difficult to find, to see, to understand how it works, which is so typical of Russian retail parking."

The city realizes that chronically choked roadways are an impediment to its attempts to carve out a reputation as a world-class city, and traffic and parking problems go hand in hand.

Instead of fighting to keep pace with the ever-growing flood of cars downtown, City Hall has moved to keep cars from coming into the city center in the first place.

In order to staunch the flow of cars into downtown, Mayor Yury Luzhkov has plans to erect a web of 50 commuter parking garages along the Moscow Ring Road, from which shuttle buses would run to nearby metro stations.

Once this is completed -- and plans are still very abstract -- the city hopes to restrict vehicle access to the city center through a policy similar to the one banning trucks without a certain sticker from traveling past the Garden Ring, Moskovsky Komsomolets reported recently. Parking at such sites would cost 10 to 12 rubles (32 to 38 cents) per day, a financial incentive to keep people from driving into the city center, where parking averages 30 rubles an hour.

In a further attempt at creative problem solving, Deputy Mayor Vladimir Resin, who oversees architectural projects in Moscow, has proposed the construction of an underwater parking facility below the Moscow River.

Some, like Alexei Vvedensky, a spokesman for the city government's department of architecture, construction, renovation and development, are skeptical about the feasibility of such an undertaking. "Some projects are realistic, and some aren't so realistic," he said.