At the beginning of the month, the Tel Aviv Municipality announced that around April, the parking rates in parking areas 1, 2 and 4 for non-residents of the city will increase from 6.70 NIS per hour to 12 NIS per hour.
“Raising the parking rates is a necessary step in the current situation where the parking shortage is increasing and the supply is greater than the demand,” the municipality explained the move. According to them, “changing the balance point will mean that it will be easier for residents who need public parking to find parking near their home. In addition, since the price of parking on the street is currently much cheaper than its real price, an excess of demand is created that burdens the parking load and the traffic in the search for parking.”
The signs that Tel Aviv’s parking crisis is worsening can also be seen in the private market as well. Data collected by the YAD2 website for Globes, based on ads that appeared on the company’s website, show that rents for private parking lots in the city increased in 2022 by about 4% compared to 2021 and about 6% compared to 2019.
A neighborhood segmentation reveals that the neighborhood with the highest demand for parking is the Montefiore neighborhood, where rents for private parking in 2022 jumped by more than 36%. The average monthly rent for private parking increased from NIS 582 in 2021 to about NIS 800 in 2022 – that is, an increase of more than NIS 200 per month.
The second area in terms of the increase in demand is the southern part of the old north – Rehovot Frishman, Y.L. Gordon, Dizengoff, King George and Sderot Chen – where the monthly rent for parking was NIS 1,156 in 2022 – 25% more than the rent in 2019, when private parking only cost NIS 919 per month.
Another sought-after area among parking lot renters in Tel Aviv is the northern area of the Old North, which includes Nordau, Dizengoff and Ben Yehuda boulevards. Rents in the area increased by about 17% within a year – from NIS 1,140 per month in 2022 to NIS 973 in 2021.
In the new north – the Madinah Square area – and in the heart of Tel Aviv, an identical increase of 11.6% was recorded in 2022. The average monthly rents in 2022 were NIS 806 and NIS 886 compared to NIS 722 and NIS 794 respectively.
They continue to build, but lower the parking standard
Yael Sa’ar, a real estate appraiser and VP of Anglo Saxon Tel Aviv, explains that a major factor affecting the rising demand for parking spaces in the city is the residential construction boom experienced by the city in recent years.
Another factor that affects the issue is the municipality’s decision to lower the number of public parking lots and the parking standard in the city. And so, says Sa’ar, “the less demand there is for parking, the higher the prices.”
According to her, “New buildings have been built in the old north, and there is also a construction boom in Madinah square. People want to find parking near the house, but the trend is one-way: reducing parking.”
Dror Obeh Zion, CEO and owner of the real estate marketing company Dra, which markets urban renewal projects in Tel Aviv that include approximately 200 parking lots in the process of being sold, explains that “in neighborhoods where parking prices have soared in the past year, there are many urban renewal projects, which are characterized by increasing of the number of housing units, without a sufficient addition of parking spaces. If we add to this the policy of the municipality to reduce parking standards to a minimum, thereby reducing the supply even more, this leads to high demand among renters.”
According to him, “In the city in general and in these neighborhoods in particular – especially in District 4 – there are many urban renewal projects that increase the number of apartments, while at the same time the amount of parking in them is minimal. There are projects where apartments do not get parking at all, or there is one parking for a family and they need another. In many projects, they also build robotic parking lots or parking lots that are inconvenient and limited in quantity – and this is another reason for the high demand for renting parking lots.”
Ohev Zion adds that there are other factors that affect the prices, including real estate prices, the increase in construction inputs and the increase in interest. “These are factors that affect the costs of building the parking lots – something that leads to an increase in their rental prices,” he explains.
Prefer to pay less for an apartment without parking
Sa’ar says that the demand for parking spaces comes from people who live in the area – those who preferred to buy an apartment for NIS 700-750 thousand less and rent a parking space for a period of time depending on the need. According to her, “Renting a parking space is part of the alternatives that we at Anglo-Saxon offer to customers in apartments that do not have parking spaces, and it is an acceptable tool to promote a sales transaction.”
Oveh Zion believes that “when more and more families are added to these neighborhoods, as well as business owners who do not have parking solutions, they reluctantly become parking tenants.” Oveh Zion points to the lack of public transportation solutions in the city as another reason for the increase in demand for parking.
Will the light rail reduce demand?
“I estimate that the light rail will have an impact on the demand for parking, but it will not happen in the immediate term.
“The red line is expected to start operating this year, but it will not completely solve the city’s transportation problems, and only when the green and purple lines are added in five to seven years, maybe it will be possible to start talking about a proper transportation solution.”
Attorney David Basson, founding partner of Hartby Bornstein Basson & Co. mentions that parking is a profitable asset for everything. According to him, “Rent for parking is taxed. When you rent a parking space, you must write an invoice to the tenant. This is not a tax-free rental like an apartment that can be rented for NIS 5,471 per month without paying tax.”
According to Attorney Basson, today the Tel Aviv Municipality does not tend to approve the attachment of more than two parking spaces to an apartment, but this is not required because a person who purchases a parking space can do so without attaching it to an apartment.
If you have a parking lot that is available for a few hours a day, one of the ways to rent it is through an agreement with a parking operator. An example of this is the company PINK PARK, which operates in the Tel Aviv area.
“We make an arrangement with the owners of the vacant parking lots and connect them with those looking for parking. That way, both we and the parking lot owners benefit when their parking lot is vacant,” explains Oren Haddad, director of customer service and support at the company.
The company’s business model is based on partnership agreements with the parking lot owners. According to Hadad, “Our customers come to the parking lot and pay according to usage on an hourly price list, and we share the profits with the property owners in an agreement that is subject to several things: the degree of availability, if there is a gate at the entrance, the size of the parking lot, the location, and more.”