Latest / The Buyout Show with Fexingo: Private Equity, Roll-Ups, and Business Acquisitions / How Private Equity Is Buying Up Airport Parking Lots
Transcript
- Lucas: You know that moment when you're running late for a flight, you pull into the off-airport parking lot, hand your keys to a guy in a vest, and hope your car is still there when you get back? Luna: I've lived that moment. Usually with a sense of mild dread. Lucas: Right. Well, that parking lot you're handing your keys to — there's a decent chance it's now owned by a private equity firm. Over the last five years, PE has quietly consolidated the airport parking business, especially the off-airport lots. Luna: Okay, that makes sense on some level. Parking is a real estate play with steady cash flow. But is it really big enough to attract the big firms? Lucas: Bigger than you'd think. Let me give you a concrete example. There's a company called Parking Concepts Inc., or PCI, based in Los Angeles. They started in the 1990s with a few lots near LAX. By 2020, they had about 40 locations. Then in 2021, they got acquired by a private equity firm. Luna: Who bought them? Lucas: A mid-market firm called Leonard Green & Partners, which already owned a parking platform called SP Plus. But that's just one deal. The big play is happening at the top. Macquarie, the Australian infrastructure investor, has been buying airport parking assets globally. Blackstone has a parking portfolio through their infrastructure arm. KKR bought a stake in a European parking operator. Luna: So what's the thesis? Why is a parking lot a good PE target? Lucas: Three things. First, the unit economics are beautiful. A single parking space near a major airport can generate about $3,000 in annual revenue. The marginal cost of that spot — once the land is paid for — is basically zero. So margins run 50 to 60 percent. Second, demand is sticky. People have to fly, and they need to park. It's not discretionary. Luna: But air travel goes up and down with the economy. That's not completely recession-proof. Lucas: Fair point. But the third factor is that PE firms are buying these as infrastructure-like assets with long-term contracts. Many off-airport lots have 20- to 30-year ground leases with the airport authority or a nearby landowner. That locked-in cash flow is perfect for a fund that needs predictable returns. Luna: So they're essentially buying annuities. What's the scale of this now? Lucas: By July 2026, we've seen over $15 billion in parking-related infrastructure deals globally, and a big chunk of that is airport parking. Some of the largest portfolios in the US include Park 'N Fly — which was acquired by a pe backed company — and The Parking Spot, which is owned by a REIT. But the roll-up play is really about the smaller independent lots. Luna: Because the independents are fragmented and cheap to buy, right? Lucas: Exactly. A single mom and pop lot near a mid-sized airport might sell for two to three times EBITDA. That's cheap compared to other real estate. And if you combine ten of those into one platform, you can centralize management, raise prices, and boost EBITDA multiple to eight or nine times when you exit. Luna: That's a classic roll-up. But is there a dark side? I mean, I've definitely noticed parking prices going up at airports. Lucas: You're not wrong. Since 2021, average daily airport parking rates in the US have risen about 30 percent. Some of that is inflation, but some is consolidation. When PE buys a lot, they often optimize pricing — dynamic pricing based on flight schedules, early-bird discounts gone, things like that. The consumer definitely feels it. Luna: And there's the longer-term risk, right? What happens when autonomous vehicles or better rideshare options cut into demand? Lucas: That's the big question. If you're a PE firm with a 10-year hold, you're betting that air travel grows and that parking remains necessary. But if Waymo or Cruise expand airport pickups, or if more people take Uber to the airport, those lots could lose value. Some firms are hedging by adding valet services, car washes, even EV charging to diversify revenue. Luna: So it's not a totally risk-free bet. But the margins are so high that even a modest decline in volume still leaves a profitable business. Lucas: That's the thinking. And for now, the numbers work. The average off-airport lot in a major city has an occupancy rate of about 70 percent. Even during the pandemic, when air travel dropped 95 percent, the lots that survived were the ones with long-term leases and PE backing. Luna: Let's talk about one specific deal that illustrates the playbook. Lucas: Sure. In 2023, a firm called Green Courte Partners — which is a private equity real estate firm focused on parking — bought a portfolio of 15 off-airport lots near Orlando, Denver, and Las Vegas. They paid about $120 million, which was roughly 6 times EBITDA. They then invested $10 million in technology — automated payment kiosks, license plate recognition, a centralized call center. Luna: And then what? They raise prices? Lucas: Yes, but gradually. They increased daily rates by about 8 percent in the first year, then another 5 percent. They also introduced a loyalty program to lock in frequent fliers. By 2025, they had grown EBITDA by 25 percent and were shopping the portfolio at a 9 times multiple. That's a nice return. Luna: So they almost doubled their money in three years. That's the dream for a mid-market fund. Lucas: Exactly. And that playbook is being replicated across dozens of markets. The biggest competition now is from the large infrastructure funds — Macquarie, Blackstone, Brookfield — who are buying entire chains. The mom and pops are getting squeezed between rising land costs and the need to invest in technology. Luna: So the consolidation is likely to continue. What does that mean for the average traveler? Lucas: More expensive parking, but possibly a better experience. The pe owned lots tend to have better lighting, cleaner shuttles, and app-based reservations. So it's a trade-off. But if you're a private equity firm looking for a boring, cash-generating business with a clear path to multiple expansion, airport parking is hard to beat. Luna: It's the ultimate unsexy asset. And that's exactly why PE loves it. Lucas: Right. No one gets excited about a parking lot. But the numbers don't lie. Luna: Speaking of numbers, if today's episode helped you think about an industry you never considered, that's exactly what we hope for. And if you find value in these conversations, the way we keep the show ad-free is listener support. Lucas: It's a small thing, but it makes a real difference. If you'd like to help, you can find us at buy me a coffee dot com slash fexingo. No pressure, just a way to keep these deep dives coming. Luna: And now back to the concrete — or asphalt, I guess. Lucas, what's the next frontier for parking roll-ups? Lucas: I think we're going to see more focus on the parking component of mixed-use developments — hotels, office parks, retail centers. PE firms are starting to buy the parking garage as a standalone asset, separate from the building above it. That's a newer trend. Luna: Because the garage has a different risk profile than the office space? Lucas: Exactly. An office tower might be half empty, but the parking garage underneath could still be full if there's a hospital or a train station nearby. So you can buy the garage at a discount, manage it actively, and sell it as a stabilized income stream. Luna: That's clever. So the next time I'm circling a parking garage, I'll think about the PE firm collecting my $30. Lucas: And the next time you see a shiny new lot with dynamic pricing and a mobile app, you'll know who's behind it. Luna: Thanks, Lucas. That was a great look under the hood. Lucas: Thanks, Luna. We'll see you next time.