Inner space attracts buyers
Investing thousands just to park cars
By Jon Hilkevitch
Tribune transportation reporter
Published April 29, 2005
Hoisting an auctioneer's mallet, Rob Nord started the bidding Thursday evening by asking who in the room had not been to an auction before.
About a dozen people raised their hands, playing nicely into Nord's punch line: "See how easy it is? That's all you have to do to buy a parking space tonight."
The action was soon under way. "I've got $17,500," Nord said. "Give me $18,000 or do you want to continue parking on the street? OK, $18,000 from the gentleman in the back row. Can I have $18,500? . .. Eighteen five. Back to you, sir, like Ping-Pong." Eventually the space sold for $21,500.
Parking is such a hot commodity in downtown Chicago that 23 spaces in two coveted locations were auctioned --Going once, going twice, sold!--to the highest bidders. The spaces sold for a total of about $750,000, according to Rick Levin & Associates Inc., which managed the auction.
Mimicking the bidding wars for fine art and antiques at auctions conducted by the Sotheby's and Christie's auction houses, about 60 people showed up at the East Bank Club to pick up their own little piece of concrete paradise in the developer's parking-closeout auction.
A complete lack of emotion characterized the mood in the room, except in the case of Kathy Anderson, who picked up an oversized parking space for $21,500 at 1250 N. LaSalle St.
"I love auctions. If they were selling car parts, I'd buy car parts," said Anderson.
"This is really great fun," added Anderson, who lives on South Wells Street and plans to rent or resell the parking space as an investment. "I could make $15,000 overnight."
Rick Levin, whose real estate firm arranged the auction on behalf of building developers, said the atmosphere at his public sales for parking spaces is more low-key than at auctions where millions of dollars trade hands. Still, Levin has auctioned off a downtown parking space for about $90,000, he said.
"We don't talk quite as fast as the auctioneers at cattle auctions," Levin said. "Buyers need time to think clearly whether their Hummer will fit into the garage versus their Mini Cooper."
The spaces up for sale were essentially surplus parking in new buildings or recently converted condo buildings. Prospective buyers of the fully deeded spaces tend to be people who live or work near the buildings and no longer want to deal with the hassle of finding daily parking, said Levin, who last year created a new niche in his business by auctioning off parking spaces.
"Some people initially looked at me cockeyed over my idea, because parking is such a funky asset to value," he said.
Matt Cohen, 25, was the winning bidder, at $27,500, for a parking space in the building at 101 W. Superior St. Cohen doesn't own a car, but he lives and works in the neighborhood.
"I drive a motorcycle and it's a pain to find a spot on the street," he said.
Nancy Abbate, who owns a creative technical assistance consultant business, didn't find the parking deal she was seeking.
"If I can't get a good deal, I'll walk out," said Abbate, a savvy investor who has bought five parking spaces previously, much like traders at the Chicago Merchantile Exchange bet on the price of pork bellies.
"You make a bigger percentage renting out parking spaces than on any residential unit you rent out," Abbate said. "With a parking space, nothing breaks, nothing has to be repainted."
Some leaders in the business community said the parking auction is a positive indicator of the demand for growing parking ownership downtown. But it also serves as a warning sign that even in the central business district, which enjoys more bus and rail service than any other part of the six-county region, many people think they cannot count solely on the Chicago Transit Authority to get around.
Perhaps, too, with the threat of severe CTA service cuts in July, well-heeled commuters are looking for a transportation hedge.
"The parking auctions are encouraging from an urban redevelopment standpoint. From an urban transportation standpoint, it reinforces the view that Chicagoans, like most Americans, still want to have the convenience of their own automobile," said Laurence Msall, president of the Civic Federation of Chicago. "It points to the need to have a comprehensive transit-planning system."
Levin has auctioned parking spaces for as little as $8,000 in a building near Oprah Winfrey's Harpo Studios, to as much as $90,000 each in an exclusive building at Chestnut Street and Michigan Avenue.
Levin said his auctions succeed because "people are in love with their cars."
One customer bought five spaces at different downtown locations so he would have his own space close to just about anywhere he parked in the Loop, said Levin, 40.
Many of those attending the auction Thursday night, with cashier's checks in hand to make bids, paid to park their cars at city meters or parking lots near the swanky downtown fitness club.
For sale were 10 indoor spaces in a heated garage in the building at 101 W. Superior St., where some spaces have sold for $63,250; and 18 open-air parking spaces on the third floor of the condominium building at 1250 N. LaSalle St., where spaces were previously priced up to $39,000, according to Levin. Five spaces did not sell.
In addition to paying the winning bid, buyers are responsible for property taxes and assessments in connection with owning the deeded parking spaces.
In each case, the auctioneer set suggested opening bids, but six spaces at the LaSalle Street address and three of the spaces on Superior were up for sale regardless of price. As little as $1 could have bought a space, theoretically.
The reality was quite different. Despite an increase in city-operated and privately owned parking garages and lots downtown, parking is at a premium and the selling prices Thursday night confirm that fact.
There are more than 100,000 off-street parking spaces downtown, according to the Chicago Department of Transportation. The total includes about 9,000 spaces in city-owned parking garages and about 1,900 metered and pay-and-display spaces in the Loop.
City officials are in the process of updating a downtown parking survey, which includes an inventory of parking facilities by area.
"Some people just will not do without their car, but if we provide too much parking, the street system and the expressway system wouldn't be able to handle it," said Rich Hazlett, planning coordinator at the city's Department of Transportation.
"Chicago has a vibrancy to it. We recognize the importance of automobile access, but we also want the downtown to remain an attractive environment to walk around," he added.
While downtown parking spaces can sell for more than the price of a modest home in some parts of Chicago and the suburbs, the market to buy parking spaces here is nowhere near as out of control as in Boston, New York and a few other cities where a single space can go for almost a quarter million dollars, real estate experts say.
In London, where authorities charge a downtown entry fee to discourage people from driving into the congested city center, prices for private parking have increased up to five times faster than the prices for houses, according to the Evening Standard newspaper.
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