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A parking garage in Chicago, October 1967. Photo: John Bulmer/Getty Images
The looming deployment of AVs could render parking garages obsolete, which has created a conundrum for developers — whether to invest in parking garages that can be converted for other uses or stop building them entirely.
The big picture: While the need for parking is acute in cities today, parking structures are typically financed with a 30-year payback and some believe that AVs will reduce or eliminate the need for parking as soon as 2030.
Background: American drivers spend an average of 17 hours per year searching for parking at an annual cost of $73 billion. But the math doesn't add up in favor of building new garages because of the looming deployment costs of AVs.
By the numbers:
- Construction costs for above-ground parking structures can cost $21,000 per space, and another $500 per year to maintain each space.
- Parking costs average $2 per hour in the U.S., but can reach $33 for two hours of parking in New York.
- AVs could cost just 50 cents per hour to operate, so it's largely expected that AVs will reduce demand for parking.
- When parking garages do become obsolete, the cost of converting them varies. In Pittsburgh, for example, it cost $17 million to convert 3 floors of a parking garage into 62 apartment units.
- Parking designed to be convertible is 17% more expensive to build and holds fewer cars per square foot.
What’s happening: In spite of the tension developers are newly navigating, most cities continue to require developers to add a minimum number of parking spaces.
- But a growing number of cities are eliminating or easing parking requirements for new development.
- And some parking structures are already being built with the intention of transforming them into office space down the road.
- Meanwhile, developers are transforming unneeded parking spots into retail space in some cases, which could offer ROIs as high as 40%. The real estate value of a single parking space can reach $75,000.
The bottom line: Analysts predict AVs could be roughly 10 years away, and developers are already bracing for shifts in parking infrastructure status quo.
Raphael Gindrat is co-founder and CEO of Bestmile, which has developed a fleet-management platform.
Editor’s note: This post has been corrected to reflect that it can cost up to $500 per year (not month) to maintain a parking space in a garage.