Amid the back-and-forth about uptown parking (see comments at my previous post) I’m surprised no one pointed out the truth about free parking. It’s not free.
“Anyone who owns an office building knows parking is never free,” is how David Feehan put it. Feehan, president of the International Downtown Association, was the moderator at Monday’s parking workshop, sponsored by Charlotte Center City Partners and the City of Charlotte.
The cost of “free” parking is hidden in what you buy, in your rent, even your paycheck. Think about it. Let’s say I want to build a store. I buy 10 acres in a place where the going rate is $10,000 an acre, paying $100,000 for land. (I’m using easy numbers, not realistic ones.) I put the store building on five acres, and set aside the rest for “free” parking. I’ll be making income from store sales with half my land, but not the other half.
So when I figure out how much to charge, part of what I have to figure in – in addition to my competitors’ prices – is the $50,000 I paid for the land under the parking lot, as well as the cost to pave it and resurface it now and again, and taxes and insurance, etc. etc. Yet that land isn’t producing any income for me.
Of course, other store owners have to do the same thing. So everyone’s absorbing the cost of their parking lots. (Ditto office developers or condo tower developers. What they paid for the land they’re using for parking gets built into the price at which they sell the project, or else the lease rates if they lease it.)
But if I could build my store and not need that parking lot (say, if I could offer my customers beam-me-in-Scottie transportation, for free), I could offer my goods for less. Or pay my workers more. Or both.
Obviously, with most people driving most places, you have to offer parking if you’re a store, office building, apartments and so on. I’m not saying you shouldn’t. Just pointing out it isn’t really “free.” The main reason you pay more uptown is that uptown land costs more, because it’s in high demand. If restaurants offer “free” parking, they just raise the prices for the fettucine alfredo. If governments offer free parking at government buildings, it’s paid for through taxes.
A UCLA professor of urban planning, Donald Shoup, has studied parking and written a book, “The High Cost of Free Parking,” in which he estimates Americans in 2002 paid $127 billion to $374 billion a year in subsidized parking. Here’s a link to an NPR interview with him from 2005.
He thinks too many cities and towns require developers to build excessive parking, and that many stores choose to build too much, trying to accommodate all the shoppers on the Saturday before Christmas, so the lot is half-filled most days of the year.
I think he's right. But of course, most people would rather not have to see (and openly pay) the cost of their not-so-free parking.
Tuesday, August 22, 2006
"Free" parking? A myth
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35 comments:
Undeniably parking spaces cost money, but no business owner sets prices in the manner you suggest. You, as a consumer, don't care -and shouldn't care- about ANY of the proprietor's costs, including rent or land purchase costs. Your only concern is your own perception of value. A lot of things can influence that, but the business owner's costs aren't one of them.
You may decide that you're willing to pay more for a loaf of bread because the parking is convenience at a given store, or because the staff is friendlier or simply because you want to be able to tell your friends that you shop at Store X. But it is not worth more to you because the store's electric bill has gone up or they've decided to re-pave the parking lot or any number of other things that don't impact you personal cost benefit analysis.
Parking SPACES certainly aren't free, but they are not a direct factor in retail product pricing. Prices are set by very broad market. That's why the prices at a Harris Teeter in a relatively low rent area such as Mint Hill Festival are exactly the same as at the much more costly S. Charlotte stores.
Businesses are going to do what they need to get people to walk in their doors. If that means making free valet parking downtown, they will do it. If that means having a vast lot for the one or two days they really need all those spaces, they will do it. It's all in how the consumer perceives it. Just like those free keychains companies give out, free services banks offer, free refills restaurants offer, etc. Somebody pays for it, but if the consumer arrives and buys even more, all for the better. What's wrong with that?
Is there free parking in my garage? are sidewalks free? Is the chair I am sitting in free? Is N.H. Free??????
So let me guess where this one is going...
Parking is not "free" according to Mary, so therefore we need more light rail and CATS service!!!
Those are "free" to you, the consumer, because they are paid for by tax money which isn't yours. It's govco's.
Lets eliminate cars and parking lots Uptown all together.
The underlying premise in her example is completely false. Her premise is that parking doesn't help generate revenue. If we lived in a car free society, then that might make sense, but the fact is that we live in a car centric society.
Does electricity for the building help generate revenue?
How about the building itself?
The walls and electricity aren't selling something to the customer, but they are required no less than the parking lot outside.
Without parking, or with greatly reduced parking, people can't even come to the store in our current society. So, how do they get there in Mary's world? Public transportation.
Just wait for the arguement that the $127 billion to $374 billion mentioned could be used more efficiently by govco if we eliminated cars and parking and used that money for public transit.
If the city/county government and/or businesses would provide more bicycle racks, it would make it easier for people to use bicycles for running errands.
This would be good for their pocketbooks (less money spent on gas), for their health (bicycling is excellent exercise), the environment (less pollution), and for the community.
Now, 'for the community' requires a little explanation. When one is encased in the steel cocoon of an automobile, one is cut off from the rest of society. One is in one's own little bubble. On a bicycle, one is still a part of society--one sees what is going on around one, one interacts with one's environment, and the reverse--people see you as an individual, rather than as 'the red Nissan' or 'the green Lexus.'
I like bacon.
In regards to parking Mary's writing indicates she grasps the no free lunch concept. Now if only she applied that same logic to public transit where a $1 ticket buys $12 to $13 of service or to zoning restictions to "raise the bar" on development standards (somebody pays).
Nice to think Mary finally grasps the concept but I have been given to late summer day dreams of late and Mary's blog quality is down so we are due for a rousing "share the wealth" post anytime now.
Working for a retailer I can see some of Mary's points as being true but like some of the other comments prices don't directly come from specific store attributes like capital expense but from non-capital expense.
Our stores are generally around 16,000 sq ft and our standard amount of parking is 76 spaces and our general store we expect to do 2 million in sales. Most of time as Mary states the parking lot is less than 1/2 full but most cities require that amount of parking so unless they change their requirements we have to meet those standards.
Businesses do charge different prices for different locations. I know the Taco Bell on Sardis Road North charges less than the one at the WalMart in University area. I know another retailer has different 3 pricing zones depending on the overall cost of doing business in that area so in someways companies do price things differently depending on general overall costs.
If fuel prices continue you may see a line on your receipts to cover the additional costs of transportation instead of seeing prices of the products increase.
I already see that with many of the vendor I use. There are surcharges for wood, steel, wire.
Utilities use Fuel Surcharges on bills to cover the rising costs since they are unable to change their prices without getting approval from the government and usally they exceed the cost of the actual usage cost.
Who is Mary Newsom kidding???
She wants parking to be as painfully expensive and unavailable as possible to prop up failed mass transit and her 1950's era nostalgia for urbaniism that is simply a thing of the past.
I think she inadvertantly boost the case to develop MORE out in the suburbs and farmland. Cheaper land means cheaper parking and subsequently cheaper prices for consumers.
So what Mary is saying is the the skyrocketing costs of real estate in uptown will eventually be passed on to the consumer!
You are finally figuring out economics, Ms. Newsom.
What a great insight into why dense, urban centers are a bad idea.
Maybe needed in the last century when most people did not have a car, we did not have the Internet (telecommuting), blackberries, etc. that now make work a mobile, virtual thing.
So if business owners did not have to pay the premium for parking, they would 'pay their employees more' or 'charge less' for their product??
OMG, I almost fell out of my chair when I read that.
What would really happen is the 98% of society who chooses to drive a car would shop somewhere else and that business would go bankrupt.
Oh, LOL, I forgot, we are all going to take light rail up to Lowes or Home Depot and carry bags of fertilzer on our backs on the train.
You really are clueless, Newsom.
If capitalism dictated that this would be feasible, it would have already been done. I guess business owners realize they need lots of parking spaces to get customers to show up.
Think the uptown pinheads will ever figure that one out?
Sure the cost of parking spaces is "hidden" in the price of goods and serivces. so is the cost of the light bill, stamps, sewer service, and everything else. This is not exactly insightful.
What is interesting is the word "hidden", as though the cost of parking spaces were a dirty little secret that someone is trying to keep. Interesting as well is the implication that if only that hidden cost could be eliminated prices would go down and wages and salaries would go up.
Of course they would not. As was pointed out in the first reply above, prices are set by the market in general, not by the individual retailer. Add to that the fact that employers pay what the market requires to obtain the skill, experience and labor output they require. Wages are not set based on other overhead costs in a business.
Anonymous said...
"1950's era nostalgia for urbanism"
Get real Buffoon !
Check out all mid sized cities across America. They are all pulling people back to the center core of town. Suburbia is what's OUT.
Try traveling a bit and you will see that we are the minority. Most countries are and have always been urban environments. Sure all of them have their "country" areas. But they do not have mass Suburbia.
Thankfully some of us are rethinking how we live.
Live close, drive hybrid, ride a bike, walk, take the light rail...yes MAJOR cities use rail. We are not small town antmore.
You selfish Suburbanite weenies.
What if we changed the word parking to restroom?
“Anyone who owns an office building knows a restroom is never free,”
“The cost of “free” restrooms is hidden in what you buy, in your rent, even your paycheck.”
“So everyone’s absorbing the cost of their parking restrooms.”
“But if I could build my store and not need that restroom…… I could offer my goods for less. Or pay my workers more. Or both.”
“You have to offer restrooms if you’re a store, office building, apartments and so on. I’m not saying you shouldn’t. Just pointing out it isn’t really “free.” The main reason you pay more uptown is that uptown land costs more, because it’s in high demand. If restaurants offer “free” restrooms, they just raise the prices for the fettucine alfredo. If governments offer free restrooms at government buildings, it’s paid for through taxes.
I think Shoup's point (and I think it might be Ms. Newsom's point) is that local government ordinances requiring a certain amount of free parking per building produces an inefficient result - a result different from what a free market would produce. A property owner might still choose to offer free parking to customers, but might also choose to build a parking lot smaller than what is currently required (because the land could be used more efficiently).
Now I think Mary writes like a bubble head most of the time. You just assume she is bringing up these points to prove why center city is golden and we are all shmucks for not living there. But what if she is going to prove that the market would make a more efficient use of spaces with less governmental interference, just as the last commenter suggested. She could still do it.
You do realize that coming to her blog to comment brings traffic to her site. Every hit is a dollar in her pocket(an easy number for you to understand) if you ignore her she will actually go away. Now that her column is a blog they can count how many people read her. Ignore her like you would ignore a troll on a forum. I think it would make Charlotte a better place.
"Check out all mid sized cities across America. They are all pulling people back to the center core of town. Suburbia is what's OUT."
The resurgence of center cities, which has yielded some good things, has largely been the product of one fact: educated, high-income people have fewer children than they used to, and wait longer to have them.
The baby boom after WWII, along with the democratization of the automobile, essentially created suburbia (these, along with the GI Bill and some other veterans' benefits that made home ownership more affordable than ever before).
However, with current trends in child-bearing, a lot of young professionals have a huge chunk of time between college and parenthood. For such people, suburbia doesn't make much sense.
I used to live in Elizabeth (now, I guess I'm a "middle-ringer"). One thing I noticed there is that, of the apparently few people there who had children, almost none of their kids were of middle-school age or older. Why? My guess is that a 900sq.ft. bungalow gets mighty cramped when you're sharing it with a teenager or two. Raising children inside of 277 would probably be even tougher. I regularly read David Walters' columns in Creative Loafing and I can't recall a single instance in which he discussed how child-rearing fit into the contemporary urban planning.
My point of interjecting this into a thread about parking is to gently suggest that our "new urbanites" ease up on the self-congratulation for their cultural sophistication (though I can't recall ever meeting one who could tell a Beethoven quartet, or even a Lester Young solo, from a hole in the ground). If anything, go to the latest uptown hot spot, order a mojito, and give a heartfelt toast to the advent of reliable contraception. That's why you're there.
Cato,
So now we need to all have the same musical tastes ? Beethoven quartet, or even a Lester Young solo ?
Who cares ?
This article is about parking problems.
Cato went zoom over their pointed little heads.
So all hail the morally and intelectually superior new urbanite. He is always right because he is always smarter just ask him?
"Check out all mid sized cities across America. They are all pulling people back to the center core of town. Suburbia is what's OUT."
- False
More people than ever are moving into suburban and even rural areas. As technology continues to trivialize urban centers, that will no doubt continue.
There may be lots of construction in uptown, but the levels of inventory have risen, the real estate market is softening, and condos are clearly being overbuilt.
Inevitably the joy of 'urbanism' wears off as paying high taxes, smelling dumpsters, and forking over condo fees wears on you.
Especially in the new south where you can get a big house on a large lot for cheap.
BTW, there *IS* free parking within 6 blocks of One Wachovia that I use all the time.
I am not telling you where, though.
False / Softening ?
Are you crazy?
Units can resell in my current building alone in less than a month. For a lot more than they were purchased for just a few years ago.
Try that in Suburbia.
The market is by no means softening. If you were such an expert you would know and be in on the profitsyourself. But your'e not. You probably want to be but you are tied down to the big family burb thing. Not everyone needs a BIG house. Quality of life and enjoying all the things to do all around you is where it's at. Have fun spending your free hours mowing and weed eating ? Maybe planting more and more landscaping ? Or how about hanging out in the garage drinking a beer and watching the moms jog by ? Now that sounds like fun.
Like I said, travel around a bit. It's not just Charlotte or the "New South".
It's every mid sized city. North, South, East and West.
Portland, OR for example is thriving downtown. They have totally rethought downtown as Charlotte is now doing. Their downtown condo sales have increased 15% in 2003, 18% in 2004 and 25% in 2005.
People are moving inward not just for commutes sake. They are also doing it because everything is close by. You can walk or bike everywhere. Theater, bars, restaurants, music and sports.
Dumpster smell ? I have been there for 3 years and have yet to smell a dumpster. Maybe it's just back draft. How often do you bath ?
Condo fees ? At least I get something for my money. My new place is going to have a 24/hr. concierge,secured entrances and parking, video security. An awesome amenities floor with an olympic pool, gym, mini theater, bar, kitchen, game room, internet cafe, yoga room, outdoor fire pits, etc. All on the 10th floor overlooking the city followed by another 26 stories of condos on top of the 10th floor deck.
Oh, did I mention my high speed internet is also included in my condo dues. Both bedroom and living room will be hi speed. All for $200 month.
I've been uptown for over three years and the inevitable joy of 'urbanism' is NOT wearing off. More like the opposite. I never leave the center city. Never need to.
Try getting all of that out in the burbs. The YMCA will cost your family half that amount alone.
But you know what ? Stay in the burbs, PLEASE.
Well, Anonymous, that sure was a snotty retort. $2400 in fees annually. Just slightly less than the taxes on my 9-room suburban, tree-shaded brick home on half a wooded acre. And I'm sure you have a hefty mortgage payment too.
I can walk safely at night in my neighborhood. Can you?
Yes smartA$$ I can walk safely. Go onto the mecklenburg police site and do some homework before you shoot off your burban trap. Uptown is the 2nd safest neighborhood in the city.
Don't think I am just some "city" dweller either. I too did my stint in Ballantyne with my 9 room plus 4 full bath 2 story on 1/3 wooded acre. If blew and still does.
Who the hell needs yard work every weekend ?
If you pay to have the yard work done, pay for the gym, pay to commute, pay for internet, a pool, etc. Then you are paying at least the $200/month that I am if not more.
But you are not relaxing and enjoying stress free life every single minute of the day. I enjoy daily exercise from walking and biking. I know tons of my neighbors because I am not locked up in a fortress in the burbs.
You go Suburban Lawn Boy.
Here's another way to look at the math.
As "happy in the burbs" said, his taxes are a little more than $2400 per year. Lets round that up to $2500 to make the math easier.
Taxes of $2500 mean the house in the burbs is assessed at roughly $200k ($195694 to be exact.)
Do a search on www.carolinahome.com for condos in area 99 (Uptown) to see what you get for the same $200k.
30 entries come up.
Starting at the bargain rate of $122000 you can get a 551 square foot condo.
That rises to $200000 for a mansion-like 846 square foot palace.
Now, as the 03:38:26 Anon said, he is raving about his "new place" meaning it is one of the new towers being built (that can also be revealed by the fact that there aren't any 26 story condo towers with residents now.) That leaves the Avenue or Trademark as the likely candidates among the towers currently being built - 36 and 28 stories respectively. (I could be wrong, but I'm sure anon will correct me.)
Trademark's cheapest unit on Carolina Home - 275,900 for 737 sq feet.
Avenue's cheapest listing -
368,700 for 1185 sqare feet.
I'll let you figure out which one gives you the most value for your money, but that sure seems like a steep price to pay in dollars and space for the "convenience" of living Uptown.
Avenue.
Read it again.
10th floor amenities deck with a 26 story tower on top = 36 sories.
MATH not your stong point ?
No one said "convenience" either. Paying attention not a strong point ?
It's all about enjoying life and not getting wrapped up in maintaining a giant mansion in the burbs.
Do you need a giant house because you, your wife and kids just can't get along together ?
More, more , more is the Burb way. Fill that life up because without all the toys and crap you would really see how much you can't stand each other.
I've been there, figured it out, downsized, moved out of the sticks and got my life back.
Maybe your money would be better spent on family therapy ?
.....or a pad uptown.
If you are happy with a 800 sq ft pad, great.
I am happy with my 4,000 sq ft mcmansion with fenced n back yard.
Mowing and weeding is a pleasure, because its my yard and even my weeds. Not something I share with others.
For the condo fees you could be investing that money, or just spending it on something else.
A concierge? I can figure out how to make a restaurant reservation all by myself, thanks.
But again, if that is what you want, I respect that.
I do disagree about the 'booming' market.
You must not read the news. The real estate market is the softest it has been in 30 months. Condos are the first ones to head south, and the most dramatically. Ask any expeienced realtor.
If you bought in the last year, you bought at the peak.
Brace yourself.
Yes I do read the news. Do you ?
Wednesdays National Real Estate Report stated that the countries overall market has slowed slightly. Except for some cities in certain states which are actually still seeing increases. Mecklenburg for one and more specific the city of Charlotte which saw a new home sales increase of 10%. Up from just one month ago. With all of the people moving to Charlotte it doesn't take much to figure out that they need places to live.
Ask any realtor you say ?
What, one that lives in the sticks ? They know ZERO about the uptown market. I have had neighbors list with these "no nothing/do nothing" large firms and their condo sits on the market for months with no bites. Then they list with someone who actually lives and specializes in uptown realty and they sell in a few weeks. It's unreal how people have no clue about their own city. Especially if you are a realtor and it's your job.
Get out more. You may get more reliable information.
Angry Anon,
I'm so sorry that I put words in your mouth yesterday. When you talked about a concierge and not having to do yard work, those items just sounded like convenience to me.
Thanks for clarifying that it is more about enjoying life at exorbitant expense compared to how most other people live. (By the way, most suburbanites don't live in 4000 sq/ft mansions - more like 2000 sq ft houses that cost half of your Avenue condo.)
As for my paying attention...
I believe I was paying attention enough to the development in this city to correctly call out which building you will be living in before it is even finished.
You are probably correct about the market Uptown. It will be fine for a while I'm sure. However, walk around 4th ward or check out Courtside in 1st ward and you'll notice that many or most balconies are empty. That, combined with all of the for rent signs, makes me wonder how many people live there and how many units are owned by speculators. I just wonder how well the developers are managing the number of investors, rather than owner-tenants, in their properties.
Anyway, I'm sure you'll correct any misconceptions.
Back to parking...in addition to freeing up land for more efficient use, discontinuing free parking frees up consumers' money for more efficient use. With free parking at most every office and retail operation, no one has any incentive to carpool, walk, ride a bike, or take transit. The reason is that part of everyone's salary/purchase price goes toward the cost of the parking. "Free" parking skews the decision-making process for rational consumers. I, for one, would think long and hard about finding another way to work if I could get the $150-ish my company spends monthly on my "free" space.
Mary:
A lot of parking that used to be free now isn't, and the arena is the main reason.
Why was it free before, but not now, if other business conditions haven't changed?
No, it's Friday and no one needs correcting on Friday. Angry Anon is off to the pool. I cut and ran early to start my "convenient" weekend.
The recent article on the uptick in sales of condos uptowns leaves out some key facts.
They dop not mention 'inventory' levels, and they do not mention days on the market, two key indicators that have gone negative in recent months.
...and that is straight from realtors I know personally who work specifically in the uptown market.
So what if sales are up 36% if inventory levels are up 100%.
Yuo are correct that real estate markets are largely a local phenomenon, but uptown has cooled off significantly, despite what the uptown cheerleaders at the Observer want to print to the contrary.
But again, different strokes...
Paying $300/sq ft to live 5 blocks from hood rats is not my bag.
Back to parking it is...
Thinking about it further, I guess there are three ways of thinking about how customers finance parking. One is the big-box method of "free" parking where the customer pays for parking based on how much money he spends at the store. If a customer doesn't buy anything on a particular visit, parking is free (or rather, the cost is being borne by paying customers).
Another is the more transparent model found uptown where parking is charged based on either the time the customer spends parked at a given spot, or on a flat fee for the whole day.
There are arguments in favor of all three, but if I'm a general retailer, I'd probably want to have my customers able to use the big-box method or pay a flat fee. The big-box method doesn't discourage casual browsing, which might turn into purchases.
With the flat fee, if the customer is willing to pay it to begin with, he may be more willing to stay around the location longer in order to "get his money's worth" out of the flat amount that has been sunk into the parking.
The pay-for-time, method, however, would seem to be the least advantageous because it would encourage people to hurry through the store.
As a general rule, I don't think retailers and restaurant owners want customers looking at their watches.
I wouldn't exactly call myself a raging liberal, but...
Race or not, calling somebody a hood rat and saying you don't want to live near one screams pure snobbery and how you think you are superior to someone else, especially 'city people'. Thanks for moving out to the boonies. You and all your stepford wife pals can stay out there.
I personally will opt to pay a couple extra dollars to live closer in town, closer to a wide variety of things to do, with the company of a waide variety of people. I'll even pay a couple dollars to park somewhere if need be.
Charlotte is finally becoming a 'real city', much to the chagrin of some.
>>I personally will opt to pay a couple extra dollars to live closer in town, closer to a wide variety of things to do, with the company of a waide variety of people. I'll even pay a couple dollars to park somewhere if need be.>>
What town are you referring to?
If I come into downtown on a Saturday afternoon, there are tunbleweeds rolling down the street.
Sure, the evenings in downtown are spilling over with drunk 20-something spilling out of Ri-Ras and such (nothing wrong with that). But that is hardly unique.
It is an inaccurate stereotype to think the suburbs are sterile or dead as far as entertainment.
There is plenty to do out here in stepfordville, and I do not have to pay to park.
Oh my !
I've lived in Ballantyne.
Snoooooooooooooooze.
It's such a drag.
But if you love it, GREAT !
Just means the boring people wont be coming uptown.
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