How the Cost of Other People's Parking Drives Up Your Rent
The metaphorical costs of parking are everywhere: in the traffic created by drivers hunting for it, in the things we don't build because we need parking garages, in the insanely long time it takes to walk to any sports stadium ever.
Quite literally, however, you may also pay for parking – whether you use it or not – in your basic monthly expenses. If you live in an apartment complex that includes parking (even parking that comes with an extra fee), its costs are likely tucked into your rent.
That's because developers (and the financiers they must satisfy, and the city regulations they must meet) assume that you drive a car even if you don't. And monthly fees for parking almost never cover the actual cost of constructing and maintaining it. As a result, many multi-family residential buildings have more parking than their tenants need. And someone has to pay for those wasted spaces. Someone also has to pay for the fact that a $75 monthly parking fee doesn't fully cover the cost of creating it.
The simplest place to push those costs? Onto renters.
Jesse London and Clark Williams-Derry estimate, in Seattle at least, that seemingly cheap residential parking could be costing some renters as much as $246 a month. In an analysis from the Sightline Institute, they've looked anew at some parking data from King County, Washington, that we've previously written about. Last year, the county tried to gauge the region's true parking demand by counting empty parking spots in local residential buildings in the middle of the night. The county did this in 220 buildings, recording the total number of empty spaces, alongside typical rents and parking fees per building.
London and Williams-Derry looked at just 23 of these same buildings – all rental properties completed since 2008. Because these buildings are so new, we can assume that developers are still recouping the costs of constructing them.
Across these 23 buildings, 37 percent of the parking capacity appeared to be unused, according to the county's data. Some buildings had parking vacancies as high as 50 percent. For the parking spots that were occupied, most of the buildings charged on average about $90 a month (two of these buildings charged nothing at all).
That fee turns out not to be anywhere near what it likely cost to create that parking. London and Williams-Derry used a tool from the Victoria Transportation Policy Institute to estimate the monthly amortized costs of constructing, maintaining and operating parking in each of these buildings. On average, these buildings were losing $170 per spot each month – just on the parking that tenants had actively rented.
Spread that loss – and the losses from unused parking – across the building, and you get London and Williams-Derry's calculation of $246 per month in hidden costs, per occupied unit.
These numbers are clearly rough estimates. London and Williams-Derry didn't receive actual construction cost numbers from each building owner, although they say they ran their conclusions by local developers, who seemed in accord. It's also possible that these losses may be spread in other ways, to commercial tenants or non-residential day-use parkers (where they exist). Developers may also be forced to simply eat some of these costs without passing them on, lest they push their rents too high.
The math is clear, though. An apartment with parking costs more to build than one without. And that difference isn't covered by the typical fees to use this resource. The price of parking is much more closely related to what people think it's worth – and what they're willing to pay for it – than what it costs to build.
"The fact that the market value of parking is so radically out of proportion to what it costs to build the parking is a sign that there is an imbalance in the market, and that people are not building the parking spaces in order to rent them out," says Williams-Derry, Sightline's director of programs "They're building them for some other reason."
Maybe it's because local zoning requires them to. Or because the logistics of engineering a parking garage force developers to create more parking than a building actually needs. Or maybe it's because developers want to retain the option to convert to condos one day – condo-owners tend to be higher-income, and likely to own more cars.
The real issue here, Williams-Derry argues, is that if you don't want to pay any parking premium in your rent because you don't own a car to park, it may be hard to find a building. These hidden costs also effectively make housing less affordable, even for renters who've made the conscious decision not to buy a car.
"If you’re a low-income person and you don’t own a car, and you just rented this place because it’s on a transit line, you are in particular trouble," Williams-Derry says. "What this all points to is an opportunity to create some buildings with little or no parking."