New parking levies to slug market

IT HAS always been one the main gripes about Sydney's central business district: finding a parking space.

And research by CB Richard Ellis shows that the planned increased parking levies in central Sydney will be a double whammy for CBD operators, who are already facing rising vacancy rates. As at July 2008, the estimated car park vacancy was 2.03 per cent - a significant fall from the 5.11 per cent recorded in 2006. But this trend is reversing in the current economic climate.

Many prominent investors have been very keen to own car parking stations as good money-making investments - given the lack of appropriate development sites and hence competition - but it has not been an easy road for them. The State Government last week introduced legislation to significantly increase the cost of off-street parking within the CBD, Milsons Point and North Sydney not used for residential purposes. The new charges, due to come into effect in July, will more than double the CBD parking levy from $950 to $2000 a year.

The objective of the increase is twofold, with the Government seeking to both discourage car usage in the city and improve public transport infrastructure. However, a CBRE senior research consultant, Peter Aingetroy, said the new charges were unlikely to achieve anything more than further reducing the already falling incomes of city building owners.

"It is expected that the car parking vacancy rate will rise over the next two years following a contraction in the CBD workforce," Mr Aingetroy said.

"With demand for car spaces falling, it is not expected that car park operators and building owners will be able to pass on the increase in the Parking Service Levy to consumers and, as such, there will be no incentive for commuters to take up public transportation alternatives."

The end result for the Government was expected to be negligible, with only $35 million expected to be raised for public transport improvements - insignificant, Mr Aingetroy said, when compared to the amount required to improve Sydney's public transport system.

CBRE's new ViewPoint report on the CBD parking market analyses the availability and demand for non-residential parking in the city. The report estimated there are 33,824 individual car spaces within the CBD not used solely for residential purposes.

Not surprisingly, the CBD core has the greatest number of non-residential spaces at 10,882, followed by the Western Corridor at 10,240, the Midtown precinct at 6234, the Southern precinct at 3874 and The Rocks precinct with 1451. In addition to the CBD, the Domain car parking station has 1144 spaces.

About 17,205 of the parking spaces in the CBD are offered to the public on a casual or permanent basis, with the remainder included in office space lease agreements.

Mr Aingetroy said the demand for CBD parking was greatly impacted by the level of CBD employment.

He said the individual cost of the increased levies to building operators would be significant, with some owners liable for an annual increase of more than $650,000. Indirectly, the increased charges could also make Sydney a less attractive investment alternative. "As investors take check of the property market and begin to value the long-term income benefits of property, any fall in income is likely result in a further reduction in demand for property."