As anyone who has had to park downtown can attest, parking rates in many cities often seem egregiously high and few alternatives exist to save on parking. This has likely prompted the question as to what factors are influencing the prices for these spaces. A recent survey from Colliers International has uncovered the cities with the highest monthly parking rates in America. Listed here are some ideas as to why such spaces are so highly sought after that they can fetch up to $1 million.
Coming off a 1.5% decrease in the unemployment rate between July 2011 and July 2012, and with a higher average wage than the rest of the country, Chicago's parking price woes are a product of its own success. The improvement in the local economy has created modest inflation which is reflected in the monthly parking rates.
With some of the cheapest parking, much of it free, Seattle seems an odd choice to be on this list. Unfortunately, this policy of underpricing has created artificially high demand. More people desire to park than might otherwise do so. The result is few, if any, spaces being available and regular commuters must purchase more expensive monthly passes in order to be assured they get a parking space.
The price paid for a monthly pass should reflect the demand for parking spots and the supply available. This allows the market to allocate and price spots efficiently. The parking rates in Philadelphia, however, are set by the city as a form of revenue collection. This creates market failure where the true number of needed parking stalls cannot be reasonably ascertained or priced appropriately. The result is too few parking spaces and higher prices for the ones available.
It's a small comfort perhaps, but expensive parking in San Francisco can be attributed to an improvement in the economy. Due to its technology and energy firms, San Francisco has benefited from the recent drop in U.S. office vacancies. As demand for its office space has increased, the number of commuters to the city has increased. This has led to a commensurate increase in demand for more parking and, of course, higher rates.
Currently experiencing a boom in housing construction, Boston's economic outlook is increasingly optimistic. This is putting the squeeze on existing parking infrastructure as more people flock to the city. Further, an increase in transit fares may shift more commuters toward their cars. Boston being on this list, however, is likely a result of a cap, in place since 1976, on the number of parking spaces. This artificially limits the supply, and it is the surest way to increase prices.
New York City
That New York has the most expensive parking in America is no surprise. It has the largest metropolitan population and one of the highest population densities in all the United States. In addition, more than 3 million people there commute. Even with slightly over half using public transit, there are still approximately 1.5 million people scrambling for a parking spot every day. This problem is compounded by the fact that a majority of commuters choose not to carpool. The Midtown area is the city's largest business district and has some of the most sought after real estate in the country. In realty, there is a concept known as "highest and best use." Basically, the land for parking spaces could be used much more effectively, but consumers demand and expect parking to be provided. A price premium needs to be charged in order to offset the losses from not using the land for more productive purposes, such as offices or apartments.
The Bottom Line
It costs a lot to park in these cities. Sometimes it's because of artificially-inflated prices, and other times it's because there is really a shortage of parking spaces. Either way, there may be no choice but to pay the prices.