Office buildings typically provide ample parking in an adjacent lot, often owned by or leased to the building. In some markets there is also mass transit, so tenants actually don’t need employee or guest parking. But what about areas such as Orange County California where most all buildings have designated parking adjacent to the building and, there is no “on street” parking or private lots as you may find in some locations?
How much parking is each tenant actually allocated?
To confirm, we contacted three local municipalities and got surprisingly upsetting news. Each of the cities responded that they base their parking calculations on the size of the entire building. If the code is set at what is technically referred to as “4-1” parking, it means for every 1000 square feet of rental space, the Landlord must provide 4 parking spaces. On a large scale, if a building is 250,000 RSF and the code is 4-1, then the landlord must provide 1000 spaces. The tenant who occupies 4000 RSF is afforded 16 spaces.
Each of the three City Planners further stated that in order to receive their permits, landlords also must show what the average occupancy of the parking lot is during the day. While it may not specifically state in the code who that parking is for, the assumption is that the landlord would provide adequate parking for both the tenants' employees and a reasonable number of guests.
Now you see the problem.
One might assume that not every tenant would need to use all the spaces they are allocated, So, some of the over-run from the tenant who does need more spaces could be accommodated by “taking” spaces which had been dedicated to other tenants. If the former needs those spaces, then it would be an internal matter for the Landlord to address.
But what about guest parking. Is the landlord required to provide a designated amount of visitor parking spaces? According to the three cities, their only concern is the total amount of spaces and they rely on the landlords to determine which and how many visitor parking spaces are allotted. The question now comes as to whether the landlord MUST provide visitor parking, regardless of whether it is free or charged to the tenant or his guest.
In a real-life situation, a landlord decided to put up a parking gate. Because parking for tenants and guests had always been free, most of the leases stated that “Parking” was free for the initial term based on the tenant’s legal ratio. The lease made no distinction between “Tenant” or Visitor” parking. The understanding was that the number of spaces allocated per the lease was for that Tenant's parking as simply a way to control the number of employees allowed to occupy the space. The reasonable assumption would be that additional guest parking would be available so the tenant could conduct their approved business per the Use Clause in the Lease.
In this case the tenant had a maximum number of employees per code. When asked about visitor parking, the landlord’s attorney took the position that their only obligation was to provide the maximum number of spaces per code and it was up to the tenant to allocate those spaces between the employees and their guests. Maybe if they have 3-4 folks in for a meeting then 3-4 employees must work out of the local Starbucks?
In negotiating your lease, you should be VERY specific as to how the parking is allocated, the costs for both tenant and guest parking and a guarantee of sorts from the Landlord that they can provide ample guest parking, regardless of whether they are free or there is a fee.
Imagine a landlord telling you that you can’t have guests? Not sure what Pandora’s box this attorney was opening but it does provide a lesson learned and fuel for thought. Or, maybe it’s time to get that flying car?