The Economics of Parking Lots

12/15/2012 12:00:00 PM
Maybe this seems to be mundane stuff, but it turns out that parking in downtown city districts is a contentious issue. On the one side, there are people like me who want more and better parking in downtown areas because we hate hate hate the hassles of parking or, worse, having to coordinate some other form of transportation. On the other side are the Utopian dreamers who think that we don't need any parking downtown, and everyone can move into apartments nearby and walk where ever they want to go.

Ok, there's actually a bit of science to this. Expanding downtown parking is often advocated as the number one way to bring business back into downtown sectors, which have a lot of appeal as quaint high-density business districts that don't spoil the countryside the way suburban sprawl does. This policy of expanding parking makes intuitive sense to a lot of people since more and easier parking reduces the costs for people to come downtown, decreasing the likelihood that they will take their cars to more car-friendly sprawling suburban developments that are practically overflowing with free parking so close to the businesses you practically don't have to walk at all.

As in all economics, however, there is another hand. Namely, parking lots are exceedingly ugly. Putting parking lots and parking garages in downtown areas takes up high-value land with a massive, noisy, dirty, eyesore. In fact, some research has shown a negative correlation between the percentage of downtown area covered by parking and the amount of economic activity in them (though, this research does not establish causality--there is an extent to which parking is more likely to be added in already declining neighborhoods). This suggests that simply adding more and more parking may not produce the desired effect--the benefits of increasing the ease with which customers can reach downtown businesses must be balanced with the cost of taking up valuable real estate and creating a business-hurting eyesore. The result is that we will probably never achieve a reality in which going downtown is as easy as going to a suburban shopping mall.

I would, however, caution people against arguing against the need for more parking on the basis that "I can always find a parking spot somewhere," or some variant of that argument. It is quite likely that downtown populations and business is constrained by the amount of parking, even if you can usually squeak by finding some parking spot on some forgotten side-street. The reason is that in the real world people do avoid downtown areas because of the difficulty and cost of finding parking, with the result that many downtown areas never grow enough to completely use up the available parking. That is, you found parking downtown not because there is enough parking, but because some suburban commuter decided that there was too little parking to try to go downtown.