It’s Black Friday, a shopping day that will likely reveal how widely wallets will be oepned this holiday season. It’s also Recovery Day, from Thanksgiving overeating.
For no particular reason, other than I saw an article in Wednesday’s Wall Street Journal in which a hedge fund manager reveals he has “discovered” parking lots as an investment form, I’m going to write about them.
There’s really nothing new about parking lots as an investment. From forever, real estate companies-and enterprising individuals–have bought raw land on the edge of towns in the hope that urban expansion will reach their purchases, making them quantum leaps more valuable. While they wait, the owners generate cash flow by making their purchases into parking lots.
In today’s time of gentrifying neglected parts of big cities, buying existing parking lots in poor neighborhoods can serve the same function.
For what it’s worth, real estate investors in the US used to do the same edge-of-town thing on a much larger scale–and with notably less success–by converting big speculative tracts into amusement parks.
The biggest drawback I can see to parking lot ownership is the fact that it involves controlling huge numbers of relatively small cash transactions. Keeping track of them is one issue. Making sure all the receipts are recorded is another. A third is that, again from forever, parking lots have been a standard way for the underworld to launder the proceeds of their illegal enterprises–making them look wildly more profitable that they actually are.
I’m not sure the hedge fund guy from two days ago realizes what he’s getting into.