Why a Philly parking mogul is planning to spend $100 million on surface lots in other states

Starting in 1930, drivers in Philadelphia began leaving their cars with three generations of the Zuritsky family and their parking-lot and garage company, now known as Parkway Corp.

Today, the company controls 21,000 parking spaces at 80 lots and garages, mostly in Philadelphia but also in Toronto, Baltimore, Richmond and Pittsburgh.

Joseph Zuritsky, who followed his uncles into the family business 60 years ago, “is still rocking, still doing deals,” says his son, Rob. Over the last decade, the Zuritskys have shifted focus, from buying more surface lots and garages, to developing hotels and apartments on former parking lots.

Now Rob is expanding that redevelopment strategy, with the first of what he says will be a new family of investment funds raising outside capital for similar projects across North America. Parkway says it has raised its first $100 million from outside investors for a debut fund, Parkway U.S. Land Carry Fund I. The fund is buying parking areas in cities where they can be readily developed, giving investors immediate parking income, plus hopes for fat payoffs from other commercial development opportunities.

Rob Zuritsky answered questions for The Inquirer; responses have been edited for brevity and clarity:

We’ll focus on 10 local markets; we’ve bought properties in three cities so far: Tampa, New Orleans and Richmond. We’re trying to find the next exciting city that’s emerging. We’re looking down South and out West, at cities that have good incentives for developers to take advantage of. We want to see a lot of demand for paid parking, and demonstrable economic momentum and business growth. And taxes are easier on businesses in some of those cities.

We are focused on acquiring surface parking lot facilities that have current operating cash flows where a higher or better use [other than parking] may be achievable, over the years. If the city prospers it will probably be a good place for us.

Philadelphia disincentivizes [paid] parking. Boston, for example, has no parking tax. Philadelphia charges a tax of 22.5% of gross parking, and then hits us with this Use and Occupancy tax. If you own a parking lot you already had 30 years ago, it’s still a good value. But if you buy it today at market value, you can’t carry it as an investment.

They [associate parking with] pollution and congestion. But even electric vehicles need to park. In fact, Philadelphia is a strong city, but it’s hard to find assets here that deliver a lot of value [at current prices and cost levels].

Now nobody is losing sleep over us parking developers. But nobody is building more, either — because they’ll lose money. The city has lost 10,000 parking spaces in Center City in the last eight years. It’s great that you’ve had development. But we are going to run out of parking.

I don’t have an answer to that yet. Cities have recovered differently. Some are recovering much more slowly. The best parking is in spaces that get multiple use — hospitals in the daytime, theaters at night, for example.

Our secret sauce is working with our friends we’ve had relationships with in the parking industry. They know their cities. And they have good technology. They just aren’t developers. They help us identify properties and start relationships with the owners.

Ron Rubin [the late Center City developer and former head of mall-landlord PREIT], David Marshall [whose Amerimar Realty owns buildings near Broad and Walnut Streets and in other cities], and Ed Snider [the late Flyers founder, Spectrum developer and arena manager] gave us new opportunities. And Tom Scannapieco, who changed the industry. We did 1706 Rittenhouse [a high-end apartment tower with car-storage elevators] with him. And then, 10 years ago, our first hotel, the Home2Suites across from Reading Terminal.

That was after the real estate meltdown [of 2008 and 2009]. It was really tough to get it done, but it’s been a really good deal since it opened. Then the Pod hotel — now it’s Motto by Hilton — on 19th Street, that was a good one. We brought in Defined Hospitality to run the restaurants; we put a club on the roof.

We’ve known how to boost income 20% or 30% without raising rates in the first year after we take over a parking operation — control expenses, add technology, negotiate the insurance, keep them clean. What has changed, [is] we’ve always had a team that worked well together, we’ve now got some rock stars. We’ve got Brianna Wilkins, who is a rock star in residential. And we’ve promoted Brian Berson, one of the best people in this market; he runs our commercial properties. He’s building the new Morgan Lewis project at 23rd and Market — that was the first parking lot I bought out of college; we’ve been trying to develop that for 25 years.

And David Dobkin, our managing director and head of acquisitions ... he was made for this position. Everybody loves him. He joined us in February and he’s already met half the industry.

And we’ve got Daniel Dean, the fund’s operating partner, and a lifelong friend of mine. He’s the adult in the room.

Private investors, people we’ve known and worked with on projects here and elsewhere. We’ve been talking about it forever, ‘Let’s go beyond those individual deals with individual partners, let’s do some funds with lots of investors and lots of projects.’ Keith Kaplan’s team at Klehr Harrison did the legal work setting up the funds. And the New York banks, they’ve decided they like the parking business, now that they understand it: You have a good cash flow, and then you can develop the properties [when you are ready].

People kept telling us that “parking looks easy.” My father and I started writing down a list of the people who told us that over the years. We knew there was more to it. And then when we were starting the fund, we went to them and told them, “Our core competency is buying land, carrying it and doing something better with it.” We have built operations expertise, and real estate, technology, and capital markets capabilities, all under one roof. And now we have a lot of opportunities here.