Why You Should Ditch Block Lease Agreements and Take Control of Your Parking Business

We’ve previously discussed the challenges that arise when two systems or stakeholders that were never built to work together suddenly must. In this article, we dive deeper into the advantages, disadvantages, and long-term consequences of block lease agreements — and explore the modern alternatives available to property owners.

When you hand over your parking assets through a block lease agreement, you also hand over your ability to shape the customer experience and the commercial outcome.

Five Consequences of Block Lease Agreements

Many property owners outsource their parking operations because they perceive them as complex or time-consuming. But outsourcing operational control comes with significant short- and long-term implications:

1. No Influence Over Customer Experience or NPS

With a block lease, the operator decides:

• What services are offered
• How pricing is structured
• Whether EV charging is available — and at what cost

The operator (who is legally your tenant) may not prioritise your NPS (Net Promoter Score) or long-term tenant satisfaction. Their revenue may instead come from price increases, EV charging markups, or enforcement fees — none of which you control.

2. Legal Lock-In Through Swedish Tenancy Law

Block leases fall under Swedish tenancy law, which includes indirect possession rights that create lock-in effects.

If you want to introduce:

• Unreserved parking
• Flexible usage models
• Dynamic pricing
• New parking services

…you may be unable to do so. The block tenant has the legal right to maintain control over how the facility is used, even when their contract terms are up for renewal.

3. Long-Term Contracts = Lost Revenue Opportunities

A decade ago, long-term block leases were relatively harmless — the parking industry barely moved.
Today, the shift toward:

• EV charging
• Shared mobility
• Digital access
• Data-driven parking management

…changes everything.

With long, inflexible contracts:

• You lose the ability to introduce new revenue streams
• You cannot respond to market demand
• You miss out on upside from service innovation
• You risk falling behind competitors

In short: By outsourcing your authority, you outsource your future earnings.

4. Parking Becomes Isolated from the Rest of the Property

Parking is an integral part of the property — not a separate ecosystem.

When parking operates in isolation through a block lease, you lose the ability to implement:

• Unified digital access solutions
• Integrated energy strategies (e.g., shared load balancing for EV charging)
• Smart Building initiatives
• Cohesive tenant experience strategies

This fragmentation creates operational inefficiencies and limits your long-term development potential.

5. Financial Predictability — The One Advantage

To be fair, block leases do offer financial security.

A fixed annual rent:

• Ensures predictable income
• Can support financing requirements like bank loans
• Reduces dependence on occupancy levels

If you choose to prioritise this, we strongly recommend including contractual requirements for:

• Collaboration
• Data sharing
• Service innovation

This helps reduce the downsides of the traditional model and opens the door to a more strategic partnership.

Three Alternatives to Block Lease Agreements

If you want to regain control of your parking business, your first step is deciding whether you want to manage operations internally or collaborate with an external operator under a more flexible structure.

Here are three alternatives:

1. Revenue-Based Lease Agreements

A revenue-based lease is ideal for property owners who:

• Don’t have the resources for in-house management
• Don’t yet have a strategic vision for parking
• Prefer a variable income structure tied to performance

Under this model, the operator handles daily operations and takes a share of the revenue — incentivising them to optimise occupancy and customer satisfaction.

2. Management Agreements

A management agreement is perfect for property owners who:

• Have a strong brand
• Want strategic control over offerings, pricing, and user experience
• Want parking services delivered in their name
• Value transparency and real-time insight into the business

The operator handles the daily work, but the property owner retains 100% visibility and authority.
It is a true partnership where:

• The operator contributes parking expertise
• The property owner integrates parking into the broader real estate strategy

3. Fully Digitalised In-House Parking Management

Many property owners choose to take full control by managing everything internally.

A digital Parking Management System makes this far easier by automating:

• Queue management
• Allocation
• Contracts
• Payments
• Access
• Pricing updates

You also gain a unified platform for all your assets — and all your data.

You can even combine approaches:

• Manage some facilities in-house
• Outsource others via a management agreement
• Keep all data unified through the same digital system

This hybrid model gives you flexibility and full operational insight.

How to Avoid Common Pitfalls

Before deciding on your future strategy, ask yourself:

• What do we risk losing — today and long-term — by using a block lease?
• What internal capabilities do we already have?
• Do we want full control, or do we want a collaborative operator partnership?
• Which contract form best supports our goals?

Still unsure?

We’re happy to help you explore your options and show how digital parking management can unlock higher NOI, stronger tenant satisfaction, and full strategic control.

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