Grosvenor Group is teaming up with Los Angeles-based private equity real estate firm Stockdale Capital Partners to invest in parking structures across the southwest US, the groups said Thursday.
The joint venture, which plans to invest between $75 million and $100 million in equity in the strategy, is targeting parking garages in infill, high-traffic submarkets; surface lots; and garages attached to hotels and office buildings that can be acquired and managed independently. The duo is partnering with San Diego-based parking operator Ace Parking Management, which manages more than 500 parking locations, to manage the day-to-day operations.
“I know of very few, if any, institutional funds or partnerships that are pursuing parking,” Dan Michaels, a managing director at Stockdale, told PERE. “It’s the most overlooked industry I’ve seen today, primarily because you need a parking management operator and there are only a few that cover the country.”
The joint venture has not yet closed on an asset but is nearing its first contract, he said.
Michaels added that the industry’s fragmentation leads to opportunities for private capital seeking yield in more unusual investment strategies. Despite the rise of ridesharing platforms such as Uber that may lead to fewer drivers in some markets, he predicted that investing in parking structures will continue to produce good returns as more surface parking lots are converted into multifamily and office buildings, leading to greater urban demand for spaces.
The firm plans to continue seeking third-party capital for this investment strategy, Michaels said.
“We know the opportunity’s quite large, with lots you pass every day that you don’t even notice. We have a long pipeline already,” he noted.
Capital for London-based Grosvenor’s stake in the joint venture came from the group’s indirect investments team, which seeks specialist third-party groups with which to invest.
Andy Yates, investment director at Grosvenor’s indirect investments platform, said: “We are excited about the opportunity within the US parking sector, and with the combination of skills brought by Stockdale and Ace. We have a great team capable of identifying and unlocking suitable investments for our investment partnership.”
Grosvenor managed a total of £13.1 billion in assets as of December 31, according to Thursday’s statement. Stockdale manages about $1 billion in assets, according to a spokesman.