"How much to charge for a parking space" is a common concern we hear on a frequent basis. A lot of communities, specifically in the multifamily industry, struggle with knowing how much and when to charge for parking due to the concern of negative response or backlash from residents. It is an unfortunate reality, that offering free parking at a community such as an apartment complex or shared condo parking lot can lead to numerous issues and even place a higher long-term cost on the local community itself. Overcrowded lots result in unhappy residents that spend additional time searching for parking; which is just one issue that can arise when there is no cost tied to parking a vehicle onsite.
Parking Lot Supply and Demand
Considering if a multifamily community or apartment complex has fewer spaces than it has units or is above the average of 1.88 vehicles owned per household (according to the U.S. Department of Transportation), the demand outweighs the supply causing a parking deficit. This results in parking problems such as residents wanting to park their vehicle close to their own home only to find out the space has been taken by a neighbor's guest who has been occupying the space for far too long. This can be managed effectively by pricing out permits based on the deficit.
Every city has building codes which allocate a specific number of parking spaces per unit, however depending on the data that was used at the time of construction, this may be outdated. Let's say the building code was 1.5 spaces per unit and now the city is running the 1.88 national average of vehicles per household – the community will definitely encounter parking issues and should look into charging second and third vehicles at a minimum.
Accommodating Guest Parking Spaces
When a community allows for cheap (below the local market price) or free guest parking, visitors are more prone to abusing parking rules since there is little to no financial repercussion whatsoever. As a community manager, it's important to first audit the amount of parking spaces (less handicap spots) vs the total number of units to get a good indication if the parking lot has enough occupancy for guests. A simple formula to use would be:
If the answer is negative, the chances for and overcrowded lot are greatly increased. If the number is positive and the community is near occupancy, designating spaces for visitor parking may be a great option. When a community has enough spaces for guests it's important to shop other local properties to see what they charge on a daily, weekly, and monthly basis. Don't forget to include local parking garages and open lots. Use those comps to better understand the market value.
An Abundance of Parking Spaces
Maybe the stars have aligned, and the community is fortunate enough to have more than enough parking for their residents and guests. Charging the onsite community may not be an option, especially if, in general, the surrounding communities are not charging for parking either. However, there's always opportunities to rent or lease out additional parking spaces to nearby business centers, construction companies, etc. If the compound does have enough parking spaces to accommodate both, guests and residents, then a system such as charging residents a one-time fee per vehicle, and allowing guests a reserved area to park at no cost during a limited duration may provide positive results as well.
Urban Communities and High Traffic Areas
In many urban areas parking issues may not arise from within the community itself, but rather overflow traffic from nearby businesses parking in a community's lot. Depending on the supply and demand of the community and its spaces, assigning designated spaces for rent may help mitigate the issues, and again, if the area is lucky enough to have a cornucopia of parking spaces, then allocating spaces for guests only may be a viable option as well. Another solution could be globally charging a permit fee for every parking space. Permit prices should be a reflection of nearby parking lots/garages to prevent abuse.
How Much to Charge for a Parking Space?
Let’s sum it up. If the community is running a parking deficit and doesn’t have enough parking for its residents and guests, charging for parking is a must. The price per space should reflect how large of a parking deficit the community is in. The larger the deficit, the higher the parking fee should be.
When looking at nearby communities, public parking, private parking garages and lots, it’s easy to see how the market has dictated the demand, and the community should reflect that.
Also, if the majority of the residents are below the national average of vehicles per household, it may be a great solution to charge much more for additional vehicles to mitigate those specifically who may be abusing any set parking rules.
Every community has unique parking challenges and it’s worthwhile to look at the fundamentals to understand how to improve a parking situation.