Commercial Mortgage Quick Reference Guide
Click a Term Below
ADR: Average Daily Rate
Commercial Bridge Loans
CMBS and Conduit Loans CTL: Credit Tenant Lease Debt Service Coverage Ratio Debt Coverage Ratio Debt Yield
Gross Rent Multiplier
Gross Potential Rent
GLA: Gross Leasable Area
LIHTC Loan Constant
Recourse Loans TI/LC: Tenant Improvements/Leasing Commission
Skin In The Game
Parking ratio is a statistic used to determined how much parking is available for a commercial property. To determine parking ratio, simply take the amount of parking spaces divided by the square footage of the property (usually measured by 1,000s of sq. ft.). For instance, a 10,000 sq. ft. building with 60 parking spaces would have a parking ratio of 6 (60/10).
In shopping centers, each space occupies approximately 300 sq. ft. of space; a little less than 200 sq. ft. for the space itself, and approximately 100 sq. ft. more for corridors, aisles, and other spaces. Certain parking garages may require less space per vehicle.
Parking Ratio Requirements Can Vary By Location
In many cases, cities and counties set minimum parking ratios, especially in highly dense areas. These required minimum property ratios can also vary based on property type; for instance, a hospital may have a higher required ratio than a commercial property typically rented by bar and restaurant tenants. However, despite occasional requirements, parking ratios are more often determined by developers, who wish to ensure that their properties remain competitive.
Often, newer, more expensive commercial developments (ex. class A office buildings) will have higher parking ratios (and accordingly, higher rents), while older, less expensive developments will have lower parking ratios and lower rents. Parking areas are often added to a tenant’s portion of CAM (common area maintenance fees), so higher parking ratios can lead to significantly higher rents for tenants.
Parking Ratios Increase in Some Areas, While Declining In Others
Over the last few years, parking ratio trends have varied significantly based on the area in question. In many areas, single-person commuting has increased, increasing the demand for parking, but this has not always lead to increases in parking ratios. Conversely, in other areas, the increase in use of ride share services (ex. Uber, Lyft) has lead to a slightly reduced demand for parking, even if developers are increasing parking ratios in the area.