This will blow your mind! What if I told you that relighting your parking garage, even if it wasn’t justified by energy and maintenance savings, would still pay for itself? I mean, even if you were to foot the entire bill without any incentives, you would still be justified in a lighting retrofit? How so?
Everyone knows by now that many factors justify lighting retrofits. They include: huge energy savings, maintenance savings, generous utility incentives and tax incentives. Add to the list another one that, until now, has gone unnoticed: increase in parkers and parking retention!
Recently, two customers reported back to us that after relighting their parking structures, they saw anywhere from a 7.5% to a 15% increase in parkers and parker retention. If I hadn’t received the phone call myself and personally seen the results, I also would not have believed it.
The first customer, an operator in a large U.S. city, has a four-level underground garage that is a full city block in size. Before the relighting, the garage had few cars parked on the lowest level, sub-level four, and a modest amount of cars on sub-level three. Within weeks of the new lighting going in (and now sustained for more than two year) sub-level three is often full and sub-level four is heavily occupied. Parkers regularly stop by the parking office and comment on the lighting, and explain their choice to come back after they saw and experienced the new lighting, citing a safer and more welcoming environment.
The other customer, an operator in a mid-size market, expressed an immediate increase in numbers of parkers within days of a major relighting project.
Let’s put the numbers to this:
Client #1 – Major Market
A single turn in a garage in this market will yield about $42 per parking event
This project had about 900 fixtures installed at about $450 per fixture as a cost. Total project cost = $405,000 x 1.09 (taxes) = $441,500. The garage can park about 2,250 cars total. The client indicated a 15% increase in parking revenue after the lights were changed.
Let’s reduce it to just 50% of that claim, to only a 7.5% increase in parkers after the lighting retrofit to not exaggerate the impact. If the garage normally filled to about 70% before the change, then 2,250 x .70 = 1,575 parkers. After the lighting retrofit (reduced to only 7.5% increase), 1,575 x 1.075 = 1,693. Therefore, a gain of 1,693 – 1,575 = 118 cars daily. At $42 per turn x 118 = $4,956 per day revenue increase.
Assume the lighting impacted only weekday commuter traffic and did not influence weekend parking decisions. $4,956 x 5 = $24,780 revenue increase per week. What is the payback based on revenue increase only? $441,500/$24,780 = 17.8 weeks or 4.5 months!
Wow, a 4.5-month payback on increased revenue alone from new parkers and parker retention.
What does that mean over five years, taking away four weeks for vacation weeks for business people annually and a random extra four weeks for bad weather impact? 5 years x (52 – 8) weeks = 220 weeks – 17.8 weeks to pay it back = 202.2 weeks x $24,780 revenue increase per week = $5,010,516 increased revenue over five years – a cool $5M. All this while the project is still under warranty!
Remember this does not include any payback based on energy and maintenance savings nor tax incentives and utility rebates. Those alone will justify the lighting project even without increased revenue. In this same market the payback for lighting, not including increased revenue, was just 2.5 years. So, in reality, one can add back the entire project cost to increased revenue and also add on the energy and maintenance savings realized after the project is paid back.
Client #2 – Mid-Size Market
A single turn in a garage in this market will yield about $12 per parking event.
This project had about 300 fixtures installed at about $425 per fixture as a cost. Total project cost = $127,500 x 1.07 (taxes) = $136,425. The garage parks about 750 cars total. The client indicated a 10% increase in parking revenue after the lights were changed.
Let’s reduce it to just 50% of that claim to only a 5% increase in parkers after the lighting retrofit (reduced to only 5% increase), 563 x 1.05 = 591. Therefore, a gain of 591 – 563 = 28 cars daily. At $12 per turn x 28 = $336 per day revenue increase.
Assume the lighting impacted only weekday commuter traffic and did not influence weekend parking decisions. $336 x 5 = $1,680 revenue increase per week. What is the payback based on revenue increase only? $136,4252/$1,680 = 81 weeks or 20 months!
Wow, a 20-month payback on increased revenue alone from new parkers and parker retention! What does that mean over five years, taking away four weeks for vacation weeks for business people annually and a random extra four weeks for bad weather impact? 5 years x (52-8) weeks = 220 weeks – 80 weeks to pay it back – 140 weeks x $1,680 revenue increase per week = $235,200 increased revenue over five years.
Not as dramatic as the Major Market, but still an excellent result.
Again, this does not count the fact that this project would have been justified on traditional lighting savings alone in this market over a four-year time frame.
In actuality, the entire project cost over the five-year example would have already been paid for, so the full project cost would have been added to the revenue increase, yielding $400,000 over the five-year example. All this while the project is still under warranty!
The paradox is this: When you think that you cannot afford to do a lighting retrofit, can you really afford not to do it?
Unless making money is not part of your business plan and you just like to park cars, doing a lighting retrofit is Economics 101, a mandatory class in operating a parking garage.
Contact Jeff Pinyot, Co-Founder of ECO Lighting Solutions and President of ECO Parking Lights, at firstname.lastname@example.org
To view or print original article, click here.