LOUISVILLE, Ky. (WDRB) — Humana Inc., Louisville’s largest corporate headquarters, has given up about 1,600 parking spaces that the health insurer used to pay for monthly in downtown Louisville, a move that underscores the company’s embrace of remote work and its reduced office footprint.
As of March, Humana canceled all of its monthly parking contracts with Louisville Metro’s Parking Authority of the River City, opting for a pay-as-you-go arrangement that lowers the company’s usage and costs, according to Michael Tudor, PARC’s executive director.
Humana had been PARC’s biggest monthly customer, paying for nearly 15% of the agency’s 11,000 off-street spaces downtown in several city-owned garages.
The company now has a “flex” arrangement with PARC in which it pays based on actual usage of one PARC facility, the Riverfront Garage, Tudor said.
PARC facilities are not the entirety of Humana’s downtown parking inventory, as the company has space in private garages including a few it owns.
Humana spokesman Mark Taylor said the change followed “a review of our employees’ parking usage and evolving work styles” and that the new program “benefits Humana employees and reduces the company’s overall parking costs.”
Employees used to have to cover some of the cost of their company-provided parking, but now they can park for free in the Riverfront garage or in a number of non-PARC locations, such as the Kentucky Center for the Arts garage, the Witherspoon garage, the Waterside garage and Waterside surface lot, Taylor said.
“The new program is designed to provide more flexible parking options with close proximity to Humana buildings, improve safety through tighter control and higher foot traffic in each parking location, and remove the employee’s personal cost for parking,” Taylor said. “The program leverages specific garages that are closer to our downtown facilities and allows our employees to select the garage closest to the facility in which they will be working that day.”
The company employs 9,000 to 10,000 who are based in the Louisville area, Taylor said last year.
Traditionally the biggest office employer downtown, Humana has significantly shrunk its footprint in the last five years, a process that accelerated during the COVID-19 pandemic.
In 2022, Humana exited Waterfront Plaza, where it once occupied nearly all of the 20-floor east tower. The company donated a nine-story office building to the University of Louisville. It had previously given up several floors in PNC Tower and the former Aegon Center at 400 W. Market Street.
The company has consolidated into spaces it owns, primarily its landmark Humana Building at 500 W. Main Street and its Waterside building at 101 E. Main Street.
Office vacancy rates have been on the rise, particularly for move-in ready “Class A” space in the Central Business District, a phenomenon not limited to Louisville.
JLL, a commercial real estate brokerage, said the Louisville market is on pace for “near-record negative absorption” in 2023, meaning more space being vacated than leased.
David Hardy, an agent with commercial real estate brokerage CBRE, who is active in the downtown Louisville office market, said Humana’s relinquishing of parking spaces is not surprising.
“I think they made their commitment to this remote working model, and they’re just not forcing people back to the office,” Hardy said.
Hardy added that even employers who wish to have employees in the office five days a week may lack the practical power to make that happen.
“Depending on the industry and type of employee, you can’t force him to do anything,” he said.
Parking Authority of the River City executive director Michael Tudor on June 5, 2023.
Losing monthly customers like Humana is a challenge for PARC, but the agency’s finances have stabilized in the last two fiscal years after it dipped into reserves to cover operating losses during the pandemic, Tudor said.
“This isn’t just with Humana; this is with all companies who have changed their parking style,” Tudor said. “And we’ve just had to adapt to it. And so we’ve adapted our budget, and we’ve cut costs where we needed to.”
A rule of thumb, Tudor said, is that if employees come to the office two days a week or fewer, a flexible program like Humana's might be better for the company. If employees come in three days a week or more, traditional monthly parking may be cheaper, he said.
Tudor said a decline in monthly customers has been partially offset by an increase in daily parking activity.
“A lot of people have already decided … when they dropped their monthly parking, to come downtown. They just pay daily … And so we've seen that side of the revenue pick up,” he said.
In April, PARC notched record revenue for on-street metered parking, though the increase was partially due to the agency’s decision to increase meter prices, Tudor said.
“The activity level on street probably isn’t quite what it was pre-COVID, but it is definitely getting there,” he said.
