Finance & Real Estate
The Infrastructure of the Future? Car Parking for Sustainable Mobility
Italy sees sustainability and infrastructure as the key to revive the process of economic growth, that has disappeared over the past twenty years. There are many important areas of infrastructure, from traditional areas such as roads and railways, to new material infrastructure such as satellites, to immaterial infrastructure such as human capital and social cohesion. To paraphrase the singer Jovanotti, “when a definition captures them, the world is ready for a new generation.” If capturing the attention of investors is just as important, why limit ourselves to looking at satellites in the sky, and not considering the street where we live? The debate associated with the promotion of infrastructure in Italy should in our view be linked more to the issue of localization, given that most infrastructure has a precise geographic location, and thus must be functional for local situations.
A very important infrastructure, that at times is neglected, is the sum of physical and digital tools for traffic management in large cities. A significant portion of traffic does not come from the movement between places, but from the time necessary to park automobiles. The problem is essentially one of sharing information in real time: driving from one place to another with the hope of finding a free spot is a very inefficient solution compared to consulting a continuously updated list of available parking places. This solution would also allow for saving fuel, polluting less, and reducing the risk of accidents.
What organizational system allows for improving the situation? What are the essential components of parking infrastructure? The literature indicates that the significant components are:
- the possibility to give information to travelers on the location, costs, and characteristics of parking places in real time;
- the smart monitoring of parking violations;
- the acceleration of the process of searching for a place;
- the possibility to reserve a parking place and to be led to it by GPS systems;
- paying for parking through an app.
What are the conditions that would allow for installing these important components? In our view, they are digitalization, the network, and ownership.
One of the areas that attracts the largest investments is that known as the Internet of Things. In real estate, and in the logistics sector in particular, automation consisting of the immediate transfer of data to the vehicles that need to drop off goods is revolutionizing the layout of buildings, increasing efficiency of traffic, and making deliveries faster. Why not create a similar system for the management of traffic in a large city? Why not think of an Internet of Cars? There are international experiences in this direction, from San Francisco to China to London, that use various technologies, often based on Artificial Intelligence, that group together:
- sensor infrastructure: there are sensors present in smartphones or cars that constantly transmit information;
- communication infrastructure: these devices transmit the data gathered among the various hardware components (sensors, parking meters, central servers);
- storage infrastructure: performs the role of consolidation of the data gathered by the sensors in order to conduct analysis. By exploiting cloud computing, it also allows for a real-time analysis of the characteristics of the relevant area;
- applicative infrastructure: performs the analysis on the data gathered by the storage infrastructure in order to extract information and make it usable for the users, often using Machine Learning algorithms that are able to predict the behavior of users and thus govern the overall dynamics of searching for parking spaces;
- user interface: guides the driver, provides information, and in some cases can also reserve free parking places.
A thousand parking places with a thousand different owners do not form an integrated network, since they are managed in an uncoordinated manner. As often happens in the O2O (online to offline) economy, in which digital systems allow for more efficient use of capital stock (from apartments to automobiles, to spots in gyms), the economic benefits of a project are linked to economies of scale of demand, and not supply, that are present when numerous users refer to the same platform. A broad network allows for better absorbing the initial costs of technological investments, improving the experience of the user, who can use the same system to solve problems on a broader area, and increasing the value of the overall project.
In the specific case of Italy, in many large cities there are networks of parking places with various characteristics of public ownership. The centralization of ownership is a great advantage for the general public, because it allows a single operator to plan an integrated use of the various spots as if it were a single network. To understand the advantages of single ownership it is useful to consider the efforts that are necessary in decentralized systems to make the users aware of the possibility to use a network of parking places and to educate them regarding the benefits of use. The experience of London (the ParkRight project) shows that the knowledge that is generated spontaneously is very low, and two additional elements are necessary:
- the design of an easy-to-use app that provides useful information in real time for searching for a parking place;
- a mass information campaign that can support the initiative and explain all of the individual and overall advantages associated with the new system.
This obviously entails significant costs, that will not necessarily be recovered directly with the construction of the infrastructure, but that are necessary in order to ensure its use by a broader public.
Andrea Beltratti is a Professor in the Department of Finance of the Bocconi University, where he teaches Economics of the Real Estate Market and Equity Portfolio Management, and Academic Director of the Executive Master in Finance (EMF) at the SDA Bocconi School of Management.
Alessia Bezzecchi is Associate Professor of Practice in Corporate Finance & Real Estate at the SDA Bocconi School of Management, where she is Program Director of the Executive Master in Finance (EMF) and of the Executive Program in Real Estate Finance and Real Estate (EPFIRE).
Diego Ferrari is the head of Project Validation for MM S.p.A.