Parking Lot Business Overview

A parking lot business provides vehicle parking spaces to customers through owned properties, leased locations, or management contracts. These operations serve diverse customer needs, from short-term parking for shoppers and commuters to long-term solutions for office workers and residents.

Parking businesses often operate in high-traffic areas such as downtown districts, shopping centers, airports, hospitals, and entertainment venues. The size of parking operations varies widely, from single-level surface lots to multi-story structures with hundreds or thousands of spaces.

The most common business models in the parking industry include:

• Property Ownership: Businesses own parking facilities and collect all parking revenue directly
• Lease Operations: Operators rent parking facilities from property owners and manage them independently
• Management Contracts: Companies operate parking facilities on behalf of property owners for a fixed fee or revenue share

Related: Checklist To Start A Business

How Do Parking Lots Make Money?

Parking lots generate their main income through hourly and daily parking fees charged to customers who need temporary vehicle storage. Customers pay based on the duration of time their vehicle occupies a parking space.

Industry Statistics

The parking lot and garage industry falls under NAICS code 812930 – Parking Lots & Garages. This classification covers businesses that provide parking and valet services at establishments on an hourly, daily, or monthly basis. Here are some important statistics about this industry.

Parking Lot Industry Size & Growth: The parking lot and garage industry generated $13.0 billion in revenue last year. Over the past five years, the industry experienced a yearly growth rate of 1.3%. The industry is expected to see continued growth in the coming years due to increased urban development and rising demand for parking services near commercial centers, transportation hubs, and entertainment venues (IBISWorld).

Number of Parking Lots: There are 6,319 parking lot businesses operating nationwide. The industry includes several large operators, with the top companies being ABM Industries Inc., LAZ Parking Ltd. LLC, and REEF Technology Inc. ABM Industries leads the market with approximately $1.87 billion in annual revenue, while LAZ Parking generates about $1.33 billion, and REEF Technology brings in roughly $908 million (IBISWorld).

Parking Lot Profit Margin: Parking lot businesses typically maintain profit margins between 5.5% and 11%.

Costs To Start a Parking Lot Business

Starting a parking lot business typically requires an initial investment between $50,000 and $2 million. The wide range reflects different business models, from managing a small surface lot to constructing a multi-level parking structure.

There are many expenses when starting a parking lot business, but here are some of the larger costs to consider:

Property Costs: The biggest expense is typically acquiring or leasing the actual parking space. Purchase prices for suitable land in urban areas can range from $250,000 to over $1 million, while lease agreements might require substantial security deposits and several months of rent upfront.

Equipment and Technology: Automated payment systems, parking meters, security cameras, access control gates, and parking management software typically cost between $15,000 and $75,000. This includes the installation of the basic infrastructure needed to operate the facility.

Construction and Site Preparation: If developing a new lot, expenses include paving, lighting, drainage systems, line striping, and signage. These improvements typically range from $25,000 for a basic surface lot to $500,000 or more for a more complex facility.

Insurance and Permits: Commercial liability insurance, property insurance, and necessary local permits can cost between $5,000 and $25,000 annually, with a portion due at startup.

These estimates are approximate, and actual costs will vary depending on location, size, and scope of operations.