I was having a conversation this week with a few friends in the industry about the future of parking. We were specifically talking about Toronto, but I would imagine that much of this holds true for many other cities around the world.
Here in Toronto, it’s not uncommon to see new parking spaces in central locations selling for upwards of $200k. For those that are not in the industry and not seeing the work and immense costs that go into building parking, this often comes as a surprise.
But as I have said many times before on the blog, parking is often a significant loss leader for new developments. Even at relatively high prices, most developers aren’t covering their costs. So developers naturally aren’t racing out to build more of it. They’re trying to build just what is absolutely necessary for the market.
Given the strong incentives to build less parking, it’s no surprise that parking ratios continue to decline. But consider some of the other parking headwinds:
- Parking minimums are (hopefully) set to be removed
- Push toward watertight undergrounds across the city (higher costs)
- Tipping fees for disposing of contaminated soil (higher costs)
- Increasing development charges / levies (higher costs)
- Introduction of inclusionary zoning (higher costs)
- Inflationary construction cost environment (again, higher costs)
There is a lag between changing cost structures and what the end consumer sees and feels. Junction House, for example, is fully tendered from a construction standpoint and so we are building with a kind of historic cost structure that would be impossible to replicate today. When the next project comes around, they’ll have higher costs and will have to price their homes accordingly.
As rising costs and new policies (like the ones I mention above) begin to work their way through the system, I think it’s fairly obvious that parking ratios will continue to be one of the first things that gets looked at and ultimately chopped down. This will make parking even more scarce in the city and surely far more expensive.
(Back in 2018, Hong Kong had the record for the most expensive parking spot in the world. I wouldn’t be surprised if it still holds this title.)
But as I have argued before, I am of the opinion that building around the car is not the way to build big and well-functioning global cities. Many of us recognize that we need to focus on alternative forms of transport — everything from public transit to new micro-mobility solutions. And given where costs are going, I don’t think we’ll have much choice.