Parking Matters
Denise Lones
Helping real estate agents build business with branding and coaching. President of The Lones Group
As urban and suburban areas across the country struggle to add more density to their city centers, the issue of parking is going to become a weightier topic and one that you as a real estate professional need to be aware of.
Some cities have done a great job of developing with walkability in mind. Cities like New York and San Francisco have robust transit systems that get people moving around the city. So, what if your city doesn't have that system in place? What if they have only recently had that system in place and people haven't yet adopted the mindset that a car really isn't required to get around? What if the transit system isn't as robust as it needs to be yet to give people that security?
There are a number of areas that are facing growing pains which may get worse instead of better in the coming years, where density will increase before the number of cars decrease.
Washington State: An Evolving Example of Density
For example, Washington State has a lofty goal of adding 1.1 million homes over the next 20 years. Very important House Bills were passed this year (1110 and 1337) to help spur on construction by way of multi-family housing and ADUs (accessory dwelling units). Both of these bills include some version of minimizing or eliminating on-site parking requirements for properties that are close in proximity to transit.
Bill 1337, for example, generally says that two accessory dwelling units will be permitted on single family residential lots in addition to the primary residence. If that lot is within half a mile of a rapid-transit line, including bus lines, then there are no additional on-site parking requirements. The logic here is that if there is easy proximity to a bus, then someone would be more-comfortable either getting rid of their vehicle or not buying one in the first place.
The challenge is that anyone who has been driving their own vehicles for a while, has the habit of jumping into their car and to go wherever they want. It will be tough to convince these folks to get rid of their cars unless they have a dramatic lifestyle shift – like moving from the suburbs to downtown Seattle. However, as transit improves, it will be easier for people to opt into a system of transportation by transit only. Eventually, cars in denser areas will become less necessary and there will be fewer of them.
This is not going to happen overnight. Neighborhoods will have more cars to park as their density increases. However, this may also be a necessary evil to get people to rethink their dependence on cars.
Multi-Family Developments
Let's talk about another aspect of parking – new multi-family developments. Did you know that, according to Statista, an asphalt-on-ground parking spot costs approximately $122.50 per square foot in Seattle? Although there are no hard-and-fast dimension rules, according to AsphaltIndustrial.com a very standard parking spot size is 18 feet long by 8.5 feet in width. Here is the math on that – a standard parking spot takes up 153 square feet and costs $18,742.50 on average to build in Seattle. If a developer is building a 50 unit building and requires one parking spot per unit, that parking is going to cost a builder almost a million dollars just in parking, and that is 7,650 square feet that is going to house cars, not people.
I know what you are thinking – a parking garage is a more-efficient use of space, so why not just build up? Great point, but the cost of a “basement” garage spot in Seattle is $205 a square foot – almost double. In fact, some put the cost to build a spot in an underground structure closer to $80,000 per space. I would highly recommend you read this white paper on parking produced by the Whatcom Housing Alliance that dives in deeper on these numbers.
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Home Builder Impact
At a time when our builders need to be focused on the best and most-efficient way to add housing that is affordable, the requirement to include parking creates an undue burden on our builders and developers. Not every development is the same, and builders and developers should be able to assess the market need for parking and build accordingly also taking into account off-site parking opportunities.
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For example, let's say a developer was building a new residential building in a busy downtown area with a limited footprint. The developer is planning on putting 36 units in the building. And let's say the current requirement is 70 parking spots (1 spot per bedroom with a mix of 1-3 bedroom units being built). However, in this example case, the development is within a mile of the local college, on a rapid-transit bus line, and most of the target demographic doesn't own a vehicle. Should the builder be required to devote 10,710 square feet of building space (the equivalent of 10 additional units on average in the building) for parking? Remember, that would also add approximately $2 million to the project (using the Statista Seattle dollars) – a cost that would then be passed down to the consumer and drive housing prices up.
What if instead, the developer could determine that only 20% of those spots were really needed which could be reserved for a monthly fee so the costs only pass to the people who need the spots, not everyone? Further, let's imagine there is a parking garage nearby that can take the overflow or people can choose to not have a vehicle readily-accessible. Further, what if this developer invests in a rentable bike or scooter solution as an alternative to the bus? There are plenty of solutions that can help mobilize residents without the cost and space requirements of parking.
Home Buyer Impact and You
As real estate professionals, if you have a buyer with one of more cars and they are considering buying in an urban or suburban area, this is an important conversation to have. How essential is on-site parking to them? How close to transit do they want to be? What kind of transit do they need to be close to? Do they need a secure place to park a bike or a scooter?
Parking and transit are just two of the aspects of what is needed to create more walkable neighborhoods. Easy-access rentable bikes and scooters, bike lanes, small grocery stores, and restaurants are also important. Parks and trails are also components of walkable cities as are other pedestrian-centric improvements such as crosswalks, wide sidewalks, traffic quieting mechanisms, and trees.
The conversation around parking and transit will continues to evolve. As you discuss these issues with your clients you may also want to brush up on what a dedicated parking spot may cost or the value this adds to a property that includes it. Value depends on a number of factors:
The values of these facilities and amenities vary widely from area to area with the value beginning at around $10,000 for an established urban neighborhood. According to the New York Times, a single parking spot in that city can be valued at over $250,000! In fact, some property owners without cars who own a parking spot in New York City can realize rent of $500 per month or more when they rent their spaces out to car-burdened residents.
Change is Here to Stay
If you are selling real estate in the middle of Nebraska or the wilds of Alaska, this article probably isn't doing anything for you. However, much of the United States is entering or already deep into a period of shifting urban and suburban design. For those of us practicing in an area that is making a concerted effort to provide more housing for its population, parking is going to be a part of that conversation.
This means you need to be part of that conversation in terms of understanding what your city and county is discussing for parking requirements for new construction, how that impacts surrounding neighborhoods, what additional density is planned for different neighborhoods and how parking plays into that, and finally having discussions with your clients about their parking needs and the value of their on-site parking assets.
I encourage you to do your reading and understand the relationship between parking and housing costs in new developments. Learn what your local building association is saying about parking requirements and help them get their voices heard by your city and county councils.
SOURCES FOR FURTHER READING
By Denise Lones CSP, M.I.R.M., CDEI - The founding partner of The Lones Group , Denise Lones, brings nearly three decades of experience in the real estate industry. With agent/broker coaching , expertise in branding , lead generation , strategic marketing, business analysis , new home project planning, product development, Denise is nationally recognized as the source for all things real estate. With a passion for improvement, Denise has helped thousands of real estate agents , brokers, and managers build their business to unprecedented levels of success, while helping them maintain balance and quality of life.