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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.

Go deeper

China's economic growth slows

A worker assembles heavy truck engines in Hangzhou in eastern China's Zhejiang Province, on Monday. Photo: Long We/Costfoto/Barcroft Media via Getty Images

China's economy grew 4.9% in the third quarter of 2021 compared with a year earlier, the country's National Bureau of Statistics announced Monday.

Why it matters: The gross domestic product growth in the July-September quarter in the world’s second-largest economy marked the "weakest pace since the third quarter of 2020 and slowing from 7.9% in the second quarter," Reuters notes.

2 hours ago - World

Former spy Steele defends controversial Trump Russia dossier

Former U.K. intelligence officer Christopher Steele arrives at the High Court in London in July 2020. Photo: Tolga Akmen/AFP via Getty Images

The author of the "Steele Dossier," containing unverified claims about former President Trump told ABC News he stands by his controversial report, according to excerpts from an upcoming documentary published Sunday.

Why it matters: Former U.K. intelligence officer Christopher Steele's dossier was used as part of former special counsel Robert Mueller's investigation into the Trump campaign's alleged links to Russia's government.

Ina Fried, author of Login
5 hours ago - Technology

Intel CEO sees making own chips as a matter of national security

Pat Gelsinger. Photo: Axios on HBO

Intel CEO Pat Gelsinger is putting the pressure on the U.S. government to help subsidize chip manufacturing, insisting the current reliance on plants in Taiwan and Korea as "geopolitically unstable."

Why it matters: There is bipartisan support for funding the domestic semiconductor industry, but Congress has yet to sign the check. The Senate has passed the CHIPS Act that includes $52 billion in semiconductor investment, but it has yet to pass the House.