NEWS

The Triple Bottom Line Cost of a Parking Spot

It is not hard to look around the society that we live in today and recognize that we place a high value on convenience. As Americans we almost demand it. We need our convenient stores that have everything from groceries to auto parts, coffee on every corner complete with single use disposable cups, and front door parking at every destination. This has led us to be the most disposable oriented country in the world. No where do we value convenience more than in how we get around. Consider that last year a parking space in New York was put on the market for $1 million dollars. It is difficult to imagine how one would exactly measure that value of parking spot, but as a New York Post article put it, “purchasing it would be equivalent to paying a $115 ticket for illegal parking every day for 24 years.” This single 12-foot by 23-foot space most certainly has an inflated value, but this example represents a larger issue in how we value parking generally.

 

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The high value put on parking isn't limited to a wealthy New York penthouse during a particularly optimistic economic recovery year. This trend was evident before the economic downturn in roughly the same mid-town Manhattan neighborhood. In 2007, according to a New York Times article, many were prepared to pay upwards of $225,000 for a parking space, despite having one of the most efficient mass transit systems in the country. The demand for parking in Manhattan is clearly high and at first glance the price would appear inelastic. The reality is that there are a few contributing factors that influence this demand: high population density, low parking supply, and high number of commuters. Manhattan has one of the highest monthly parking rates of major cities in the US. The pricing is related to supply and demand but is not a perfect system.
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The price, in this instance, is related to human behavior, but does the cost reflect its value? The square foot cost is approximately $815 compared to an average price per square foot of livable space of $1,294 in the same neighborhood. One way to look at it is that New Yorkers value parking space 63% as much as they value livable space.
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The high price tag for parking doesn't necessarily mean that it is of high value.  The supply of parking spaces is driven by policy and an individual cities’ off-street parking policy.  Interestingly enough Seattle, Portland and Bellevue made the list as having monthly parking rates higher than the national average, despite their lower population densities. Obviously, median income of an area influences the price, so a direct comparison between Seattle and New York cannot be made.
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In the case of Seattle, the new development code regulates that an off-street parking space be provided for each dwelling unit and one space for every 1000 square feet of office space.  This implies that the supply would be high, driving prices lower, but the reality is the high prices are a reflection of the learned behaviors of convenience and the lack of efficient mass transit. In comparison on-street parking, assuming an eight hour work day in Seattle, would cost roughly $650 per month, more than twice the cost of parking on private property.
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The cost of providing this off street parking space is much greater. There are costs associated with construction, lost opportunity costs, and cost from CO2 emissions from what will be parked there day in and day out.
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  • Based on estimates, construction costs for a parking garage are approximately $60 per square foot. Based on the original New York example of a 23-foot by 12-foot parking space, the typical construction cost of a parking spot is $16,560.
  • The lost cost of using that space as commercial space, based on $30 per square foot per year comes to $248,400.
  • Assuming a typical commute, a vehicle produces about 5.1 metric tons of carbon per year, or 153 metric tons of CO2. Note, the US per annual per capita emission is approximately 17 metric tons per year.
  • In contrast, the revenue generated from that spot at $285 per month over 30 years (no adjustments for net present value or price change) would be $102,600. According to a study conducted by the Urban Land Institute, on average, city-wide parking is supplied at 1.4 spaces per dwelling unit but is only used at about one space per unit; meaning that approximately 30% of all spaces are under-utilized. Therefore the true revenue over 30 years would be 70% of the expected revenue or $71,820.
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The cost of our parking addiction quickly adds up to roughly $6,470 per year and 5.1 metric tons of tailpipe carbon dioxide for each car that parks in downtown Seattle. Considering the median income of a Seattleite is $52,048, we have to ask ourselves if the convenience of a parking spot is really worth 10% of our annual income and a third of our annual per capita emissions.