Wurlitzer Building to be saved, turned into boutique hotel

[animatedmartian]

Are you trying to tell me parking garages make a good return on their owner's investment?? Seriously??

I'm pretty sure another poster even said to you that parking garages generate revenue for their owners. They don't really cost much to operate and as long as there's land to build on and demand for parking, they'll generate revenue.

Of course, they still abide by the rules of supply and demand and if every building had their own parking garages, no one would be getting any revenue because there would be an oversupply of parking. That's why places like MGM Grand or Motor City Casino have free parking; they have so much parking but only use probably less than half of it. It wouldn't be profitable to charge rates.

[davewindsor]

I'm pretty sure another poster even said to you that parking garages generate revenue for their owners. They don't really cost much to operate and as long as there's land to build on and demand for parking, they'll generate revenue.

Of course, they still abide by the rules of supply and demand and if every building had their own parking garages, no one would be getting any revenue because there would be an oversupply of parking. That's why places like MGM Grand or Motor City Casino have free parking; they have so much parking but only use probably less than half of it. It wouldn't be profitable to charge rates.

So you think parking garages generate revenue for their owners? Let's examine this point. It costs on average $59 a square foot to build a parking garage. http://www.fixr.com/costs/build-parking-garage So, let's say you need about 700 square feet for each parking space [[the space, plus access to move into the spot, roads inside the garage, ramp, etc.). So, a 100 parking spots x 700 square feet x $59 is $4.13m. So if a vacant parcel of land for a garage bought from a gouging land speculator is $2m, that comes to $6.13m. Let's say operating costs [[insurance, lighted ceilings, etc.), security surveillance, maintenance, taxes is $100K a year. So, if an investor was looking at a 10% return on their investment, this garage would have to generate $713K a year to generate a decent return for the owner. That's $7,130 a year per spot or around $600 a month [[assuming it's full), which is about $475 more per month than the Compuware garage charges.

What's the break even point? Well if a commercial mortgage for a garage in Detroit is 8%, you would need $590K a year or around $490 a month per spot just to break even on your mortgage payments and expenses [[assuming it's full).

So please explain to me how a garage makes money for its owners as a standalone business? It has to be subsidized by a neighboring business [[ex. the compuware building subsidizing the compuware garage) or by taxpayers [[through grants, subsidies, etc.) because it's always a money loser.

[Spartan]

x 700 square feet

Not that I totally disagree with your points about the profitability of a garage, but that's a big ass parking spot. Spots are usually about 200 sq ft [[10 x 20). At best, double that for ramp area. The Z-lot, for example, uses less than 400 sq ft per spot [[535,000 - 33,000) / 1,287 = 390 sq ft.

http://www.bedrockmgt.com/properties/specs.php?id=22

Now, with regard to profitability, it would likely be retail/office space that would actually earn the money for the investor. Nobody is going to build JUST a parking garage [[in fact, I think it's against city code right now). I'm sure $713K a year [[which is already a stretch on what the estimate should be) is much less daunting when you have people paying commercial rent. I believe the number I saw before was around $20 sq ft. Using the Z as an example again, they'd be making around $66k per month just from the retail.

And last, there is plenty of parking already in Detroit. No reason a new hotel with only a hundred rooms should need it. The David Whitney didn't build a new garage, and that's a bigger property, which has residences in it. At some point, there will need to be more parking added, but we're not even close to that point. The only time the lots are stressed is for events, and Ilitch opens thousands of spots that aren't normally available to accommodate that. My guess is that they would use valet and rent space from the Opera House [[which, as you outlined, would likely be cheaper than building their own garage somewhere).

[davewindsor]

Not that I totally disagree with your points about the profitability of a garage, but that's a big ass parking spot. Spots are usually about 200 sq ft [[10 x 20). At best, double that for ramp area. The Z-lot, for example, uses less than 400 sq ft per spot [[535,000 - 33,000) / 1,287 = 390 sq ft.

I've never been in the Z garage, but 390 sq. per spot when you factor in the columns between spots, roads and ramps sounds like a really tight fit moving around inside it. You can't park in the corners if you're going to maximize parking spots. The outer perimeter column spots can only be one parking spot deep. There's staircases and pedestrian elevators and block walls. An up ramp and down ramp. It seems tight, but I haven't been in it.

[animatedmartian]

So you think parking garages generate revenue for their owners? Let's examine this point. It costs on average $59 a square foot to build a parking garage. http://www.fixr.com/costs/build-parking-garage So, let's say you need about 700 square feet for each parking space [[the space, plus access to move into the spot, roads inside the garage, ramp, etc.). So, a 100 parking spots x 700 square feet x $59 is $4.13m. So if a vacant parcel of land for a garage bought from a gouging land speculator is $2m, that comes to $6.13m. Let's say operating costs [[insurance, lighted ceilings, etc.), security surveillance, maintenance, taxes is $100K a year. So, if an investor was looking at a 10% return on their investment, this garage would have to generate $713K a year to generate a decent return for the owner. That's $7,130 a year per spot or around $600 a month [[assuming it's full), which is about $475 more per month than the Compuware garage charges.

What's the break even point? Well if a commercial mortgage for a garage in Detroit is 8%, you would need $590K a year or around $490 a month per spot just to break even on your mortgage payments and expenses [[assuming it's full).

So please explain to me how a garage makes money for its owners as a standalone business? It has to be subsidized by a neighboring business [[ex. the compuware building subsidizing the compuware garage) or by taxpayers [[through grants, subsidies, etc.) because it's always a money loser.

It always somehow leads to subsidization with you.

You didn't add in the revenue generated by those attending downtown events; the sports games, festivals, conventions, etc. Anytime there's an event downtown, parking shoots up to $25 per car. So that'd be like $2500 per downtown event assuming that no car leaves during the duration of the event [[so obviously in real life it would be a lot more). And how many events take place downtown within any given year? Owners of car garages are making beaucoup money.

[davewindsor]

It always somehow leads to subsidization with you.

You didn't add in the revenue generated by those attending downtown events; the sports games, festivals, conventions, etc. Anytime there's an event downtown, parking shoots up to $25 per car. So that'd be like $2500 per downtown event assuming that no car leaves during the duration of the event [[so obviously in real life it would be a lot more). And how many events take place downtown within any given year? Owners of car garages are making beaucoup money.

If you're going to be charging $25 per car per day, you're also going to need live employees running the garage, which is drastically raising your operating expenses. Plus, parking garages are not full throughout the week, so those weekend rates are subsidizing the slow weekdays. At the end of the year, you haven't made jack squat.

[animatedmartian]

If you're going to be charging $25 per car per day, you're also going to need live employees running the garage, which is drastically raising your operating expenses. Plus, parking garages are not full throughout the week, so those weekend rates are subsidizing the slow weekdays. At the end of the year, you haven't made jack squat.

You seem to not be aware at how often major events occur downtown.

[davewindsor]

You seem to not be aware at how often major events occur downtown.

Major events are a lot more busy on the weekend than during the Monday to Thursday weekdays. Most out-of-towners have to work during the week. Are you not aware of that?