Parking Rights in a Commercial Lease

Office buildings commonly express parking as a number of spaces per 1,000 square feet of leased area. Many leases state it per 1,000 rentable square feet, and denser layouts and older or heavily occupied buildings can strain capacity.

The wording varies. A lease may use usable area or rentable area, may tie the landlord’s obligation to a local minimum requirement, or may count every space in the project, including reserved and visitor spaces. So read the definition and not just the number. The Leasing Lawyers, a commercial real estate law firm, warn that vague "access to parking" language is not protection, and that a ratio may still leave a tenant with fewer spaces than it needs.

Here is the arithmetic. This example is hypothetical, for illustration. A tenant leasing 10,000 rentable square feet at 3 spaces per 1,000 is entitled to 30 spaces. If it has 40 employees and expects 20 of them to drive on a normal day, plus visitors, the ratio works. If it plans to fit 60 people in the same space and most drive, the same ratio does not.

Run the ratio against your people, not your square footage. Two tenants with identical suites can have completely different parking needs.

Unreserved spaces are first come, first served, so you can have a right to them and still not find one at 9:30 in the morning. Reserved spaces are assigned to you, usually marked, and often cost more. The designation of spaces and the cost of both reserved and unassigned spaces can often be negotiated.

• Reserved spaces make sense for key staff, frequent visitors, patients and company vehicles. They tend to be most worth paying for where general parking is tight.
• Unreserved spaces or passes cover the general workforce. Check whether the lease gives you the right to a number of spaces or merely a right to use the lot in common with others.
• Visitor parking is a separate question. Ask where clients park, whether it is validated, who pays and whether a time limit applies.
• Accessible parking and the route from it to your door belong in the review too. Our ADA guide covers who is responsible for what.
• Oversized vehicles, overnight parking and electric vehicle charging may need their own language if they matter to you.

It also helps to evaluate parking as a tenant would, not as a visitor: count the walk from your office to your car, and treat long searches for an open space as a warning sign of oversubscription or weak enforcement. Visit at peak time on a normal weekday, and check again in bad weather if the lot is outdoors.

Parking can be a meaningful part of your occupancy cost, particularly downtown. It can add materially to the total, and covered structures generally cost more. So include it in any comparison of proposals. A low rent in a building with paid parking may not be lower overall than a higher rent with free spaces.

Then look at the future. A lease that says you will pay the building’s prevailing parking rate leaves that number open for the whole term. Some leases state no limit on future increases, some cap escalation over a set period, and others tie extension-term charges to the prevailing rate. Ask for what your situation needs.

• ✓Is the number of spaces stated as a right, and not merely as a ratio the building may offer?
• ✓Is the rate fixed for the term? If not, is there a cap on increases or a limit on how often rates can change?
• ✓Are any spaces free for all or part of the term, and does that continue in a renewal?
• ✓Do we have to pay for all of the spaces whether we use them or not, or can we reduce the number on notice?
• ✓Can we add spaces later, at what price, and subject to what availability?
• ✓Do our parking rights and rates carry over to an expansion, renewal, sublease or assignment?
• ✓Is parking tax included in the price, or added on?
• ✓Who controls the garage? If an outside operator runs it, is the landlord still responsible for our rights?

A parking right can erode without anyone breaching anything. New tenants fill up the lot. The landlord resurfaces it or restripes it. The owner sells part of the land. A clause should anticipate this.

• Minimum count. Ask for a stated number of spaces that the landlord will maintain for you.
• Location. Some leases let the landlord change unreserved locations, and some lots may be temporary. If distance matters, limit how far spaces may be moved, and consider an exhibit showing reserved spaces.
• Temporary loss. Ask for a substitute, and for transportation if needed, when the garage closes for repairs. Provide for a rent or parking credit if you lose spaces for a long time.
• Changes to the site. Limit the landlord’s right to build on the parking area or to reduce the count below a set level.
• Enforcement. Ask how spaces are monitored and who responds if someone takes your reserved space.
• Remedy. Consider what you can do if you do not get what the lease promises, whether a credit, a substitute location or, if parking is essential to your use, a right to leave.

Local rules can matter too. Zoning may set a minimum number of spaces for a use, and the building’s approvals may limit what it can offer. Ask your attorney or the local zoning office if your use needs more parking than a typical office.

For a medical practice, a service business with clients arriving by car, a suburban office with no transit, or a team of field staff, parking can be the deciding feature of the deal. It is worth setting a minimum requirement before you tour, so that you do not spend time on a building that cannot work.

Downtown, the question usually changes from how many spaces to how much they cost and how many of your people actually drive. Attendance differs by company, so use your own data on how often people come in, instead of assuming everyone needs a space every day.

1. Survey your team: who drives, how often and from where. Add visitors and vehicles.
2. Put the count, the reserved number and the price in your proposal to every building, so that the responses can be compared.
3. Include parking in your total occupancy cost for each option, over the whole term.
4. Visit each serious option at peak time.
5. Move the agreed terms from the letter of intent into the lease, and confirm that the parking exhibit matches.

Landlords may be willing to make parking concessions, depending on market conditions and bargaining power. It helps to negotiate a detailed parking provision and to flag problems in candidate buildings early. That is how we work at Tenant Advisory Group: we raise parking with the first request for proposal, and we keep it next to the rent in the comparison so it is negotiated as a real cost.