On the 10th floor of Parkway Corp.’s Philadelphia headquarters building—nine floors of parking spaces topped by one enclosed floor of nondescript office cubicles—CEO Joseph S. Zuritsky has built an enormous atrium. In the middle of it, he has installed a landscaped series of plaster ponds and waterfalls and stocked them with 20 brightly colored Japanese koi, large gold and orange carp that resemble giant goldfish. Bred by Zuritsky on his fish farm outside the city, the koi, symbols in Japan of wealth and longevity, are known to live for up to 75 years—and in some rare cases, even longer.
The symbolism isn’t lost on Parkway executives or its rivals. Founded more than 75 years ago by Zuritsky’s father and uncle to demolish old buildings and turn them into parking lots to accommodate America’s growing new love affair with the automobile, Parkway, now Philadelphia’s largest parking garage operator and third-largest landowner, is today facing one of its toughest business cycles yet.
Traditionally cutthroat, the $29 billion parking industry in recent years has become a story about the survival of the fittest. Heavy consolidation in the industry, driven by Wall Street in the economic boom of the late 1990s, has gobbled up dozens of mid-size firms in recent years, while stiff price wars and soaring liability insurance costs—up 30 percent to 50 percent, on average, during the past year—have forced most companies in the industry to compete more heavily by cutting costs rather than lowering prices, and compelling executives to scramble for ever more elusive efficiencies.
According to Jennifer Childe, a parking industry analyst for Bear, Stearns & Co. Inc., the health of any one parking firm tends to be tied most closely to commercial building occupancy rates, which depend largely on employment rates. When occupancy rates go below 90 percent in major cities, such as during the current economic downturn, parking companies like Parkway feel the pinch. Childe says that as a result, many garages have been cutting prices in recent months and weeks to stay competitive. But companies which stand a lasting chance of success, she says, will be those that can better eke out continuing efficiencies in operations and provide extra value to customers to keep them coming back for more.
That’s where Parkway has gotten lucky. Many smaller firms have bitten the dust, but not Parkway—not yet. For most of its history, Parkway’s edge was based on its expertise in acquiring real estate and developing it, a skill that gave Parkway, among other advantages, lots situated in some of the best locations in various cities: those next to high-traffic or soon to be high-traffic destinations. But now Zuritsky, to stay competitive, is having to add technology to the mix.
During the technology boom of the late 1990s, Parkway, which owns and manages 30,000 parking spaces and 100 garages in nine East Coast cities, from Toronto to Jacksonville, Fla., saw its growth surge, partly due to a modest recovery in Philadelphia’s downtown business climate. Revenues were up 6 percent in 1997, up 13 percent in 1998, up 15 percent in 1999 and up 11 percent in 2000. But as growth increased, so did Parkway’s costs. Indeed, in some cases, costs were seriously eroding gains, and suddenly, it seemed, the old-fashioned way of running garages—on intuition, wits and experience—wasn’t cutting it anymore. The company’s mostly paper-based reporting systems, at the time merely inconvenient, were suddenly no longer accurate enough, broad enough or fast enough to let executives manage costs as well as before. “We’d exceeded our ability to manage things by ourselves,” Zuritsky recalls. “We needed technology now to help us.” With growth came more data, “and executives had increasing difficulty making sense of what was happening,” adds Doug Krauss of RCG Information Technology, a business intelligence consultancy familiar with Parkway.