Selling a parking garage: Valuation, condition, tenant & sale – 18 steps

Selling parking garage 2022 – valuation, condition, broker and tenant lists, what becomes important when selling parking garage? Who buys a parking garage? Who might even buy parking garages as a portfolio? This little guide is not for real estate professionals, but for beginners. Especially for those selling for the first time (example inheritance): How much is a parking garage worth? How does the sale work? Here you get an insight into the sale, the valuation factors and also the question: sell with or without a broker? Tip. You “only” want to sell a single parking space? Then read more here: Selling a parking space. For parking lot sellers, here everything important, from valuation procedures to the topic of taxes.

Sell parking garage 2022: valuation to broker

First, let’s start with one of the most important questions for first-time sellers: what is your parking garage worth?

After the 3 important factors, you will then find all the steps of the sale, from documents, to the broker question, to the purchase contract and handover.

Let’s start with the 3 most important value factors:

  • Location (city, district and street)
  • Parking garage condition
  • Tenant / Vacancy

Location from parking garage: Perspective

The better the location of your parking garage, the easier it will be to rent it out later to short-term and long-term tenants or parking ends. To keep the vacancy rate as low as possible, the first step in the valuation process is to take a close look at the location.

Situation in the valuation (current and development):

  • The macro perspective – Which city?
  • The meso perspective – Which district?
  • The micro perspective – street and house number?

Whether small town, medium-sized cities or metropolitan areas, every year there are more and more cars in the city centers – also seen later in the example on the real estate market in Germany. The higher the local fluctuation and the lower the competitive offers here at the location, the better for your sales success, but also for the investors’ return.

Accordingly, the development of the location also plays a role.

The second important issue: the condition of your parking garage.

Condition of the parking garage: redevelopment

Very few buyers and investors want to put a lot of work into the new property, you want to earn a direct return. For you, but also for those who gladly accept some work, for a cheaper purchase price, the current condition counts after the location (macro / meso / mirco).

Irrelevant for relatively new parking garages, important for old ones. Here is an insight for you, especially first-time sellers, how high the refurbishment costs can be for such a project.

Typical shortcomings of the first decades are:

  • Carbonate remediation (by carbon dioxide and sulfur dioxide)
  • Floor coatings
  • Concrete repair
  • Crack sealing
  • Waterproofing the ceilings

Important in advance, it is only an example:

The maintenance costs for parking garages vary massively, depending on the condition

Very old parking garage: cost example (100 parking spaces)

Let’s say it’s a really old parking garage, with 100 spaces:

Let’s say the parking garage is 40, 50 years old and really at the end of its rope. Conversion and renovation costs are unavoidable. If we roughly calculate with ~ 100 parking spaces, you can expect ~ 6,000 euros per parking space (as a total project).

Just upgrading the floor of a parking garage would cost about 1.4 million euros. Then there is the rehabilitation of the concrete, round about 1.1 million euros. Next, we take a look at the waterproofing of the parking garage ceiling. For the new insulation against dripping water, you can expect another 0.5 million euros (source: DZ Online). The items will be smaller, but in total not insignificant. In addition, smoke extraction, ventilation or even the renewal of the electrical installation, also to be able to take increasing markets, such as the increasing electric cars in the inner cities and residential areas.

Tenants (long-term/short-term) and vacancies

Also a clear difference, existing leases. Especially if the parking garage is not located in a busy city center where the residential complex, but in special places, for example, measuring facilities, airports or even something else outside.

Apart from short-term tenants and fluctuation at the location, a look at long-term tenants and vacancies also counts. In the end, it is the tenants and the potential of the parking garage that are important in the initial evaluation.

Long-term leases are, of course, the ideal case. Accordingly, vacancies are the opposite. In order for prospective buyers to have an overview and for the valuation to be realistic, information on the tenants is required.

In addition, there are many smaller parameters, in good A-locations, for example, commercial space rental for advertising (driveway, parking areas and facades).

These are the 3 central factors of the evaluation:

  • Location (city, district and street)
  • Parking garage condition
  • Tenant / Vacancy

Regular sale step by step

Sales of parking garages are much more specialized and extensive than the simple sale of a parking space, parking lot or a single garage in a residential development.

The majority of parking garages are not sold through real estate portals, but through personal networks, often by good and experienced real estate agents.

Nevertheless, it is important to know for the sale so that you can prepare well and also find an experienced real estate agent to sell your parking garage.

Preparation: broker, documents and valuation

How to prepare your property and the sale.

Sales phase: networking and negotiation

The second phase is about marketing your property to find buyers and investors with sufficient creditworthiness.

Sales processing: complete transfer

From the purchase contract to the handover.

Partial ownership of parking garage: single parking space?

Finally, the smallest unit:

Can you (as a part owner) sell a parking space individually? The individual sale of parking spaces is possible. However, it depends on whether it is subject to special ownership or a special right of use. As a rule, above-ground parking spaces are a special right of use, so a sale requires the consent of the entire owners, unless otherwise stipulated in the partition agreement.

Here you can find more about the individual sale of parking spaces in a parking garage:

Location, location, location! Real estate market

Parking spaces are scarce in many hotspots in Germany. That’s why the first piece of good news is that you can sell your parking garage at a realistic price. Because last year alone, there were 2.92 million new passenger car registrations. According to the Federal Motor Transport Authority ( KBA ), the vehicle population in Germany increased by a full 1.1 million vehicles compared to the previous year’s reporting date to approximately 66.9 million vehicles registered in Germany, a full +1.6%.

66.9 million registered vehicles in Germany

With the right buyer and investor network, typically through experienced brokers with successful deals, you will have your underground parking garage sold relatively quickly.