Parking: Expectations vs Reality

I’m going to address an issue that has really started to become a theme recently for site selection among buyers and tenants: parking.

Background

Alberta is in love with the automobile; I’m quite positive that anybody reading this can easily think of a household that has a ratio of cars to people above one. This probably doesn’t even take into account the ancillary vehicles we own as well: RV’s, trailers, quads, boats, and sleds. The corollary to this is we have to find a place to put it all. This means multi-car garages, parking pads, extended driveways, on street parking in subdivisions and third party storage facilities. Another factor is the specific vehicles we drive; travel down any Alberta road and you will see full size pickups or SUV’s making up anywhere from 25% to 50% of the vehicles. I’ve had many conversations with foreigners visiting Alberta for the first time about how they had to take pictures or videos of this situation because their friends wouldn’t believe them.

There are many reasons it has gotten this way. Our fuel costs rank as one of the lowest globally; our weather and climate make it difficult to not have a four wheel drive vehicle; safety is obviously higher if you drive a bigger vehicle; our lifestyles and careers encourages these vehicles (camping, quading, hiking, etc.); and the distances between our destinations are larger. The lack of cheap and quick public transportation means most of the time our only option is to drive to where we are going. We lack the population density to make mass public transit viable; think the high speed rail debate between Edmonton and Calgary. Finally, comparatively to the rest of the world, it is quite expensive to fly anywhere.

Expectations

As a result of all these vehicles, parking has become a major issue for every property, development, lease space, and municipalities as a whole. The trend from many planning departments is to get away from the vehicle; to create harmonious mixed use developments where everybody walks to their destination. Unfortunately, reality is much different. I say this reluctantly but humans, on a whole, are quite lazy. It is the reason why we need to have 23 car drive-thrus (and even then we still queue onto the street). It contributes to the debate as to why we “lack” parking: if parking isn’t regularly available directly in front of our destination, then we are reluctant to frequent this business.

The key is managing your expectations on parking. It is not uncommon to have a tenant or buyer request sites that support a parking requirement of five, ten, or even twenty stalls per 1,000 square feet (this is a lot). Their reasoning is they account for every staff member to have a stall and then one stall per customer operating at maximum occupancy. This just isn’t realistic. If developments went off of those ratios, our urban sprawl would be a much larger problem than it already is. Further, the same issue would arise as to not having adequate parking due to the point made earlier on a lack of stalls directly in front of your destination.

Which leads to the second issue I deal with: paying for parking. Generally, rent is calculated by charging on the rentable area of a development, not on the land associated with it. Having those higher ratios means there is a cost to grade, pave and maintain those parking lots. These costs would be passed onto the tenants through triple net and common area maintenance costs (see this post for more on operating costs) or through higher base rents due to the increased cost of the development. One way to lower rents is to charge for parking which is typically found in office style developments. Alas, people hate to pay for parking whether it is through a parking meter or as a monthly fee. Calgary is famous for the outrageous rates charged there. However, you will pay for parking in one way or another either through rents or directly for a stall. The Economist has put out an article on the negatives of free parking (click here for the article).

Reality

The bottom line is that we have adequate parking for our current needs. Being past chair of the Downtown Business Association, there were numerous studies done by the City of Red Deer as to what occupancy level their parking lots operated at in the downtown (an area frequently regarded as having no parking). The result was that on a whole, the city’s parking lots and on-street parking operated at a 33% occupancy. Further there are over 5,000 stalls in the downtown. These numbers don’t even take into account the private stalls and underground parkades at buildings. I also challenge someone to go to a development that has “no” parking and stand there at the busiest time and not find a stall. Nine times out of ten there is a stall in a corner, you just have to walk. Finally, you will pay for parking regardless if it is a direct cost for a stall per month or through rental rates on your space. If a thorough analysis was done, you might even find that the paid parking stall per month is actually cheaper than going to a place where it is “free”.

If we can all start to get off our reliance of needing a vehicle then we might be able to solve our parking issues. Until then it is a matter of managing our expectations with reality.

~Brett Salomons