per Car, U.S. Offices with Free Surface Parking
assist analysis of TDM programs (5/19/08)
For Hacienda Business Park
in the expensive San Francisco Bay Area, the daily subsidy per car may be $7.59,
by one calculation. Calculation details are provided in #3 below.
If a city allows unused surface
parking spaces to be re-developed into new buildings, then effective TDM
programs could reduce parking demand and unleash hidden real-estate gains.
The ability to bring about such gains would increase the value of the daily
subsidy because the opportunity cost of having unused surface parking would be
large. Via this method, the daily subsidy per car could top $20.
For companies where the office
real-estate requires parking structures, the daily subsidy is closer to $20 per
day per car parked, according to one Bay Area employer.
In VTPI's Transportation
Cost and Benefit Analysis - Updated December 2006, Section 5.4 provides 20
pages covering many different parking costs:
shows a maximum monthly
amortized surface parking
space cost of $119 with an average of $68 (given in 1997 dollars). With 23
working days per month, this translates into daily subsidies of $5.17 and $2.96,
on the Hacienda daily subsidy calculation:
monthly cost per parking space is based on maintenance costs and on
According to Eno Foundation's book entitled Parking (and according to
VTPI), annual operations and maintenance cost per parking space is roughly
$300 per year, or $25 per month.
When offices are built,
surface parking is built alongside to accommodate cars. For construction
costs, buildings cost much more to build than does surface parking (very
roughly $200 versus $15 per sf). For land acquisition costs, the land
value is the same whether the land receives a building or parking (very
roughly $3M per acre or $70 per sf). So, for a monthly lease for office space,
how much of the cost should be attributed to the parking? Via a land and
construction costs allocation, parking takes roughly 20% of overall costs.
325 square feet per parking
space (includes parking lot access roads and landscaping)
Near-full occupancy of the
parking lot, or one parking space per car. [Assuming full occupancy
will understate the cost of a parking space. Richard Willson's studies
have shown 50% or more of office surface parking spaces go unused. The
most accurate calculation will be: lease cost * percent allocated to parking
* square feet per car at that particular location. If 50% of parking
spaces are unused, then the square feet of parking per car is 325 sf * 150%.
At Hacienda, the monthly
office lease cost is about $2.30 per square foot, so the monthly cost for a
325 square foot parking space is $149.50 ($2.30 per square foot * 20% * 325
Hence the total monthly cost
per parking space is maintenance plus real-estate value = $25 + $149.50 =
Daily subsidy per car
For the daily subsidy per
car, there are about 23 working days per month, so the daily subsidy is
$174.50/23 = $7.59.
4. Comments from Jeff
Tumlin, Principal, Nelson Nygaard Associates:
There are a broad variety of
ways to calculate the “cost” or “price” or “value” of parking, depending upon
how you define each term. Your number is within the right ballpark, but the
formula erroneously assumes that all square footage is created equal. The cost
and value of parking are very different from office space. A more accurate
approach toward cost would be to look at amortized land value + capital costs
plus annual operating costs for parking. The market value of parking, however,
is also relevant but generally much lower – that is, how much is a tenant
willing to pay for parking, given the choice? And the value varies along a
curve; that is, when parking is oversupplied the value per marginal space is
zero, and when parking is undersupplied it is very high.
In a high land value location like Hacienda, the cost of parking would likely
run around $20 a day, assuming the developer could do something else with the
land if it were not needed for parking. Low allowable FARs [floor area ratios -
the amount of buildable office space per acre], however, significantly devalue
land once a building is put up on it. One could argue that the land value
underneath a Hacienda parking lot is zero – or negative -- in which case the
cost drops to around $1 a day, covering maintenance, utilities, insurance and
other minor operating costs.
Thanks very much for expertise from James Paxson, Genl Mgr, Hacienda Business
Park Owners Association