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SubjectsTransportation › Parking Demand and Pricing
Reviewed 03/2012

Parking Demand and Pricing

Contents

Introduction

Parking demand estimates, pricing and management are affected significantly by public regulation, in addition to market driven forces. Important factors include land use development regulations, economic development efforts, traffic demand management (TDM), and environmental goals. Municipal governments directly control the amount, price, and nature of on-street parking in order to control traffic flow and to encourage turnover of use for the benefit of adjoining retail and service oriented land uses. However, municipal governments also regulate off-street parking with zoning and other development requirements, including minimum and/or maximum parking space requirements. This means that private, market-driven forces do not operate independently of regulation.

A significant amount of land is dedicated to auto parking. Each of us has a parking space at home, the shopping center, at work, at school - practically everywhere we go. Local zoning ordinances, building codes, bank financing rules and other development practices result in an oversupply of parking spaces in most of our communities.

Local governments and businesses around the country are taking innovative approaches to address parking demand and pricing issues. Motorists are increasingly being called upon to pay directly for use of parking facilities. Parking supply management and pricing may be used as a strategy to reduce vehicle traffic and parking problems in a particular location. In additions, parking prices may be set to recover parking facility costs or to generate revenue for other purposes such as a local transportation program or downtown improvement district.

Estimating Parking Demand

Traditionally, minimum parking requirements have been set by local jurisdictions using two primary and convenient reference sources:

  • Parking Generation, 4th edition, Institute of Traffic Engineers, 2010 - available through MRSC Library Loan
  • Parking Standards, edited by Michael Davidson and Fay Dolnick, PAS Report 510/511, American Planning Association, 2002, available through MRSC Library Loan - A compilation of standards from jurisdictions across the United States

While these two reference sources are relatively comprehensive and readily available, they have been criticized on these points:

  • The Parking Generation book is based on demand at single-use suburban sites, where ample free parking exists and few or no alternatives to driving are provided. The highest peak demand observed is then often used to set the minimum requirement. While this approach prevents spillover parking in all but extreme cases, it often means that a large supply sits vacant almost every day of the year. Parking requirements established solely through use of this publication may not be appropriate in denser urban communities.
  • The Parking Standards publication reports what other jurisdictions use in their development codes. The editors note in the 2002 edition, that planners and developers have reported a change in philosophy in their communities and have suggested that previous parking standards are excessive; meaning that citizens sometimes perceive that requirements result in more spaces than are necessary to meet demand,or in "wasted" space that might be better put to use. The 2002 edition obtains standards from communities that are geographically and demographically diverse to give planners a range of standards that will better fit the goals and uses in the community. It also provides standards for shared parking, bicycle parking, and maximum parking standards.

Parking demand refers to the amount of parking that is estimated to be used at a particular time, place, and price. It is a critical factor in evaluating parking problems and solutions. Parking demand is affected by vehicle ownership, trip rates, mode split, duration (how long motorists park), geographic location (i.e., downtown, regional town center or suburban), the quality of travel alternatives, type of trip (work, shopping, recreational), and factors such as fuel and road pricing. In many ways, estimating parking demand is a value judgment, rather than a technical exercise.

In depth discussion of parking demand estimates and management issues can be found at:

Parking Pricing as a Parking Management Strategy

There is no such thing as a free lunch or free parking. Land or structure costs associated with parking are recovered through increased real estate development costs and sales prices, leases, and rental rates. The Victoria Transport Policy Institute (VTPI) provides a very thorough exploration of Parking Pricing that advocates direct charges for use of parking facilities. Selected thoughts from that website are:

  • Most vehicle parking is provided free or significantly subsidized. Of the 95% of U.S. employees who commute by automobile, only 5% pay full parking costs and 9% pay a subsidized rate, and parking is unpriced at more than 98% of non-commute trip destinations (BTS, 1992). When parking is priced, there are often substantial discounts for long-term leases and sometimes there is no hourly or daily rental option, leaving motorists with little financial incentive to use alternative modes part time.
  • Given a choice, motorists usually prefer unpriced parking. But unpriced parking is not really free. Consumers ultimately bear parking costs through higher taxes and retail prices, and reduced wages and benefits. The choice is actually between paying for parking directly or indirectly. Paying directly for parking is more equitable and efficient
  • Much of the resistance to paying directly for parking reflects the inconvenience of current payment methods, and obstacles to using alternatives. Parking Pricing can become more accepted if:
  • Better pricing methods are used that make pricing more convenient and fair.
  • Transportation and parking management strategies are used to improve consumers' transportation choices.
  • Marketing is used to provide better information on parking prices and availability, and transportation alternatives
  • Manage and price the most convenient parking spaces to favor priority users. Charge higher rates and use shorter pricing periods at more convenient parking spaces (such as on-street spaces, and parking near building entrances) to increase turnover and favor higher-priority uses.
  • Encourage businesses to price, cash out and unbundle parking by providing rewards to those that do, legislating it, or by imposing special property taxes on unpriced parking. Unbundle parking from housing, so apartment and condominium residents pay only for the parking spaces they need (Location Efficient Development).
  • If parking must be subsidized, use targeted discounts and exemptions, rather than offering free parking to everybody. For example, to subsidize customer parking, allow businesses to validate parking tickets or provide free parking coupons to customers. To subsidize parking for people with low incomes or disabilities, provide discounts directly to those individuals.

Parking Pricing, by the Victoria Transport Policy Institute, contains a section entitled Setting Parking Rates and Fines, with useful tables showing typical parking facility costs, fees needed to recover costs and typical parking rates across the US and Canada. In particular, this document contains a Parking Cost Spreadsheet, helping illustrate the cost of providing various types of parking.

Balancing Parking Demand, Resource Use, and Livability Issues

Satisfaction of parking demand basically means that parking is available at a particular time and location that fits motorists' perceptions and acceptance of such factors as affordability, safety, and comfortable walking distances to their final destination. Developers and elected officials alike often ask: "At what point do the benefits of ample parking outweigh the negative consequences? "

Insufficient parking has an economic impact if residents, employees, and customers can't find parking that meets their needs and go elsewhere to live, shop or work. Too much parking means money wasted on maintenance, lease payments, mortgages, or inefficient land use.

As noted in Parking Evaluation, by the Victoria Transport Policy Institute, a typical off-street parking space uses 300-400 square feet (sf) of land, whether in a surface lot or parking structure. On-street parking requires 140-160 sf per space. Land costs can vary from just a few thousand dollars for a rural acre to more than a million dollars an acre in major urban areas. Even if land is available for parking at little or no additional cost, such as a part of existing road right-of-way, or part of a parcel that is not needed for buildings, there may still be missed opportunity costs:

  • Using curb space for parking may require trade-offs with traffic lanes, landscaping or sidewalk space.
  • Public land devoted to parking facilities is often treated as having no cost, but there is usually an opportunity cost, as the land could be rented or sold, or converted into parks.

Donald Shoup and Michael Manville, in an article entitled People, Parking, and Cities (ACCESS, University of California Transportation Center, Fall 2004) note that CBDs have long been plagued by questions about parking and access, as they can either thrive on or be destroyed by congestion:

"A successful Central Business District (CBD) combines large amounts of labor and capital on a small amount of land. CBDs thrive on high density because the prime advantage they offer over other parts of a metropolitan area is proximity-the immediate availability of a wide variety of activities. The clustering of museums, theaters, restaurants, and offices is the commodity a downtown can offer that other areas cannot. Yet downtowns have long been plagued by questions about access, for they can either thrive on or be destroyed by congestion. In order to thrive, a CBD must receive a critical mass of people every day but do so without clogging itself to the point of paralysis. One way to do this is to require off-street parking spaces. Off-street parking can reduce cruising for parking that often congests the streets of CBDs. However, off-street parking requires parking lots or structures with associated high costs."

Conventional parking lots and structures can undermine a CBD's success, as Shoup and Manville explain:

  • A downtown surface lot often has a very high and very visible opportunity cost. Instead of a building teeming with activity there is an expanse of asphalt with one employee manning a booth;
  • But even when off-street parking is dressed up or hidden-when it is placed underground, or in a structure that has retail uses at the street level-it is inimical to density. Because land is most expensive in the CBD, off-street parking is also most expensive there, and constructing it uses up capital that could otherwise be invested more productively.
  • More important, if off-street parking is required, as it is in many cities (notably Los Angeles), then it becomes rational for firms to locate in places where land is less expensive, meaning it becomes rational to locate outside the CBD.

If you took all of the parking spaces in the Los Angeles CBD and spread them horizontally in a surface lot, they would cover 81 percent of the CBD's land area. This ratio-of parking area to total land area- is called the "parking coverage rate", and it is higher in downtown LA than in any other downtown on earth. In San Francisco, for instance, the coverage rate is 35 percent, and in New York it is only 18 percent. (People, Parking, and Cities, p4)

Ask yourself: Name one city famous for its cheap, abundant parking.

Free parking is not what makes cities great. It doesn't make Manhattan and it doesn't make downtown San Francisco. Their willingness to limit rather than require parking makes them worthy of emulation. Shoup and Manville conclude that perhaps the simplest and most productive reform of American zoning would be to declare that all existing off-street parking requirements are maximums rather than minimums.

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