Parking Lot Operation: Observation of Japan from a Business Perspective and Economic Benefit Calculation of a Typical Parking Lot in China

With increased car ownership, China faces a parking space shortage. The government encourages parking lot construction and smart parking brings positive change, but no in-depth studies discuss the economics of parking space operation in China. This study addresses three business models: owned, lease, and manage, and reviews how Japan’s Park24 benefited from unattended parking facilities and sound policies. Three conclusions are drawn: with the increase of managed parking spaces (1) the average revenue of a single parking space will drop to a certain fixed value; (2) refinancing tools such as ABS/REITs play an important role; and (3) the operator needs to expand scope for growth. This paper calculates the economic benefit of a typical parking lot in China before and after the intelligent renovation in a simplified lease business model. The result is that NPV improves but a lower annualized ROI occurs due to high initial buyout fees.