How Shifting Parking Minimums Impact CRE Development

Parking minimums, which mandate a fixed number of off-street parking spots owners must provide for every residential, commercial, or office building, have been a part of state and local policy in the United States since the post-war era. Zoning codes started to include parking requirements to address concerns around congestion, ensure businesses could succeed, and provide convenience to residents. Now, policymakers, environmental activists, and affordable housing developers have begun to reevaluate the impact of parking minimums on sustainability and the ongoing housing crisis. 

Local governments at the municipal or county level are often responsible for setting parking minimums through zoning codes or ordinances. Government officials and policymakers are increasingly seeing the benefits of reducing or eliminating parking requirements, as unused lots can decrease housing supply and increase housing costs. Mandatory parking minimums are also often in conflict with efforts to promote mixed-use development, high-density affordable housing, and walkable communities. From reduced up-front costs to increased opportunities in multifamily housing development, the shifting environment around parking policy can also have major implications for your firm. 

Here’s everything you need to know about eliminations or reductions of state and local parking minimums and how this shift in policy can benefit your development team: 

Evolution of Parking Minimum Zoning Policy 

Parking minimums were originally meant to reduce traffic, create convenience for residents, and boost patronage at local businesses. However, the zoning policy has been subject to harsh criticism over the years, with affordable housing, environmental, and public transportation advocates saying the parking minimums are decreasing the housing supply and raising rental costs. The cost of parking spots can be highly prohibitive for developers — it costs an average of $28,000 to build a parking spot, and construction costs are even higher in metropolitan areas like New York City, where the average parking spot costs up to $38,000 without factoring in land acquisition costs. 

Developers and housing or environmental advocates are united in a desire to reduce or eliminate parking minimums on new projects, especially those in major urban areas with transportation hubs. Critics often point out that the policy has resulted in an excess of lots - the country now has a billion parking spots, but only 250 million cars, meaning America’s parking lots have eight parking spots for every car. Even worse, the transition to remote work and the rise of online retail have made more parking lots obsolete. Eco-conscious urban planners have long pointed out how excess concrete lots both increase car dependency and take up space communities badly need to create walkable neighborhoods with high-density multifamily housing. 

The Brookings Institution conducted research in 2020 that found parking requirements were driving up the cost of multifamily development, and a better policy would be to let businesses and developers decide how much parking to build. In a nationwide shift, many communities are seeing positive impacts from reducing or eliminating minimums. In Buffalo, New York, and Seattle, Washington, where parking minimums were ended in 2017 and 2012 respectively, nearly 70% of homes built after reforms would not have been able to be constructed under the old policy. Minneapolis, Raleigh, and San Jose followed close behind. Even in car-centric cities like Houston and Los Angeles parking minimums are seen as outdated and being revisited. For example, California recently passed a law that removes minimums for new buildings built near public transportation. 

How Eliminating Parking Minimums Boosts Affordable Housing 

Since the cost of building a parking spot is so steep, tenants are also the ones found footing the extra costs to compensate, posing additional challenges to creating affordable housing in major cities. Parking minimums also lead to lower-density housing development, and in cities with ample public transportation where car dependence is lower, the spots will often go unused. 

The metropolitan areas that have reduced, shifted, or eliminated parking minimums have seen an undeniable boost in housing production. Across the U.S. there is an average of 1,000 square feet of parking per person, and only 800 square feet of housing per person, meaning cities are currently being quite literally built for cars. When Buffalo eliminated parking minimums, developers built buildings with less parking in transit-rich corridors. Developers of 36 major projects - including two larger housing complexes targeted to graduate students with 200 units each - included 47% less parking than projects completed before the new policy. The reduced upfront costs mean developers can take on more projects at an ambitious scale, and units can be offered to residents with lower rents. 

The recently approved rules to reduce parking requirements in Los Angeles have allowed multifamily developers and owners to increase the pool of projects eligible for adaptive reuse in the city. The COVID-19 pandemic and the advent of remote work rendered many Class B and Class C office buildings obsolete. Looking to make the most of the space and address the city’s dire housing crisis, the need for adaptive reuse that converts the space into housing is more urgent. Now that developers don’t have to worry about hitting residential parking minimums on buildings, unused office space can be reworked and brought to market faster. 

Broader Implications of Parking Minimum Elimination For Your Team 

The push to lower or eliminate parking minimums reflects a national shift toward zoning policy that boosts multifamily housing production. The growing consensus is that parking minimums do more harm than good, and you can expect to see minimums reduced in more places, especially in areas where housing shortages are more acute. Eliminating parking minimums has benefits for city and urban planning from a holistic standpoint, but this shifting policy also poses clear-cut benefits for your development team. When cities and towns ditch parking minimums, your development team can also streamline the entitlement process, reducing the amount of time and resources necessary to secure approvals. 

In the absence of strict parking minimums or regulations, your development team needs to evaluate the need for parking. Before embarking on a complex residential project, it’s important to do thorough due diligence, and that includes evaluating the demand or need for parking in the region of your project. First, you’ll want to evaluate offsite parking availability, such as nearby street parking. You’ll also need to consider access to public transportation or other transportation methods such as bicycle infrastructure. In certain cases, eliminating parking requirements won’t necessarily eliminate the need for lots, especially for areas that aren’t walkable or are underserved by public transportation. Finding the appropriate number of parking spots for your project will benefit both your firm and the community at large. 

Leveraging Technology to Facilitate Regulatory Compliance 

Parking minimums are just one of the many regulatory obstacles you might face over the lifecycle of a high-density multifamily housing project. Modern real estate development software can help your team manage and organize regulatory documentation from pre-development to stabilization. Northspyre automatically captures and organizes every project document, extracting data and organizing across budget lines in minutes. The platform also creates a paper trail of your changes, making it easier to comply with audits or other inspections that arise throughout the development process. Direct access to your important regulatory documentation also prevents the compliance process from derailing your project timeline and causing unnecessary budget overruns. 

Northspyre can also generate reports to demonstrate compliance to government agencies and other zoning or regulatory agencies. The ability to streamline reporting and decrease your reliance on outdated and error-prone spreadsheets, will allow you to meet zoning and building code regulations without derailing your timeline. The platform also increases efficiency throughout the reporting process by facilitating easier communication and coordination between your development team and relevant stakeholders, ensuring all involved are aware of compliance requirements around parking and have the relevant documentation to produce reports. 

Download our Developers’ Guide to Notable Zoning Changes to learn more about how zoning changes can present opportunities for your development team.