Sell for More Trivia is a weekly blog series that playfully presents a trivia question about commercial real estate.
All across the country developers want to build less parking at new their new apartment developments.
They can often save millions if they build fewer parking spaces…but they also risk losing potential residents if they fail to build enough parking spaces to satisfy demand.
Meanwhile, a development with too much parking will be less financially successful because the developers built empty parking spaces that weren’t necessary.
Most developers agree that parking demand will only decrease in the future…they cite the convenience and affordability of ridesharing, primarily.
A typical garden apartment property in a commuter suburb now tends to need about one parking space per one-bedroom apartment…and two for a two+ bedroom unit.
However, outdated building codes in many jurisdictions often require as many as two spaces for every unit, regardless of the number of bedrooms. It’s not only a waste of money, but of valuable space as well.
To comply, a suburban, garden apartment development with 250 units would have to include 500 parking spaces—even though it might only need 400 spaces.
The savings on not building those 100 extra surface parking spaces could be $250,000. This suburban property could also provide much more greenspace if its developer didn’t have to build those 100 surface parking spaces.
Apartment properties can often get by with fewer parking spaces if they’re located in urban areas where residents can get to shopping, amenities or public transit without getting into a car. Indeed, there have been successful urban projects that provide no parking at all.
The cost of building parking spaces is also much higher in many urban areas where land is often too valuable to use as a simple, surface parking lot. To stack multiple levels of parking and living spaces, developers typically have to use much more expensive concrete construction.
Subterranean parking spaces cost around $35,000 a space. The extra cost of building 100 parking spaces could easily top $2 million in a structured, concrete parking garage or a podium building with residential space built over concrete parking.
These costs create a giant incentive to build fewer parking spaces…if developers can convince local officials.
Most agree that the next 10 years will see a lot of change. For example, when autonomous shared ride vehicles finally hit mainstream it will certainly reduce the need even more.
In fact, some developers are now creating parking structures that could potentially be converted to other uses…if the need for parking changes. They are “future-proofing” parking structures.
Subterranean garages would be impossible to convert but freestanding parking structures are relatively easy to design for the future. You need a level parking surface so you can’t have ramped parking spaces. You also need to make sure the floor to floor height can work for a residential, office or other contemplated use. And finally, you need to make sure the slab will allow for penetrations for the needed utilities.
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About Beau Beach, MBA CCIM
Beau is a tenacious Commercial Real Estate Broker, author and adoring father of four. His clients appreciate his no-nonsense demeanor and his legendary work ethic.
Beau leads Beachwood which is a commercial real estate broker for sellers in the Nashville, Milwaukee and South Florida markets.
He’s the author of the books The 3 Reasons: Why Most Commercial Properties Don’t Sell and True Wealth: What Every Seller Should Know About 1031 Exchanges.
Beau can be reached at 800-721-3287, click to schedule a call or Beau@BeachwoodSells.com