How Important is Parking for Small Apartment Properties?
While a growing number of cities are eliminating parking minimums, the price of parking access within apartment properties is still reflected in higher unit rents across US metros. This is especially true for in-structure parking offerings.
Prevalence of Parking within Apartment Properties
Minimum parking requirements impact residential development in a number of ways — first by restricting the supply of housing units, and secondly, by internalizing the cost of parking in higher average unit rents.
In response, cities across the United States are doing away with the parking minimums, which still exert a vice-like grip in the car-oriented Sun Belt metros.
Data obtained from the American Housing Survey (AHS) 2015 show that nationally, nearly 21% of all units in small apartment buildings had access to some form of in-structure parking ranging from car-ports to garages, compared to 25% in large buildings.
In the Los Angeles metro area – arguably the car capital of the United States — nearly 73% of all small property units had access to in-structure parking. This statistic was equally high in the adjoining Riverside-San Bernardino metro area at 71%. In Phoenix and San Francisco, half of all small building units had parking access in structure.
In direct contrast, the older East Coast metros — New York, Boston, Philadelphia and Washington D.C. — had a significantly lower share of units with in-structure parking access at between 4% and 6%.
What’s the Price Markup on Apartments with Parking?
At the same time, the impact of in-structure parking on housing costs is evident across US metros, where the average rents for such units in small buildings were 23% higher compared to the overall average for this asset class, and 22% higher in large buildings.
Interestingly, rent premiums for parking access is significantly higher in parking supply-constrained East Coast and Rust Belt metros, compared to those in the Sun Belt.
Small property investors and developers need to closely follow policy changes on parking minimums for their focus markets, as cities tackle supply-side factors that affect housing affordability.