Parking is a critical aspect of almost all real estate investments. Whether building, renovating, or acquiring resale assets, you will always need to determine how much parking your building needs. You may have too much and can convert that underutilized space, or you may need more spaces and need to consider underground parking.
How exactly do you determine your parking requirements? The answer depends on two primary considerations: local zoning requirements and the type of real estate.
Local zoning and special considerations
To begin, you'll need to find and understand your municipality's zoning requirements for the type of property you're looking to build or acquire. For example, some municipalities require two parking spots per liveable unit. So if you're building a fourplex, you'll need to ensure you have enough land for eight parking spots.
For higher-density locations and projects, such as a downtown condo, the parking requirements may be less given that tenants may use public transit and walk to amenities.
If you're looking at a commercial property such as a restaurant, strip mall, or office building, there will be specific local requirements depending on the size and location of the property. For example, for every 100 square feet of your business, you may be required to provide one parking spot. In this example, if you're running a 2,000-square-foot restaurant, you'd need 20 parking spots.
In Seattle, local officials conducted a study and found that on average, multifamily developments had 1.4 parking spaces per liveable unit. To get a better sense of your parking requirements, here are the most important considerations:
Conduct a simple internet search that includes your municipality plus the word "zoning" to see if you can access these documents online. You'll quickly find out that different zoning categories have different parking requirements. The rules aren't just for how many spaces you need but the sizes of those individual spaces as well. For instance, one study of shopping mall parking found that the historical average of a parking space was 250 square feet and it was increasing to 300 square feet.
There can also be parking location rules. For example, many residential zoning ordinances don't allow for parking spots to be directly in front of entryways.
The best option after you review your local zoning laws online is to reach out to the zoning or land-use office in your town to discuss your specific plan. These municipal employees live and breathe zoning and will have a much better idea of the viability of your proposal, including how much parking is required.
If you're tackling a larger project, you may want to reach out to a licensed urban planner. These professionals will have experience in real estate development planning and zoning rules in your particular jurisdiction.
When building, developers must take into consideration the Americans with Disabilities Act (ADA), which requires one disabled spot per 25 parking spaces.
Types of parking
As you consider how much parking you'll need for your real estate asset, you also should be aware of and consider the different types of parking. Here are some of the more common types:
- Street parking: For smaller residential developments within certain neighborhoods, investors can rely on some level of street parking being accepted by the municipality.
- Underground parking: Seen in larger commercial and residential projects, underground parking is typical where buildable land is expensive and in low supply. Think of major cities and downtown cores, where a surface-level lot would be an inefficient and expensive use of land.
- Exterior lots: These are open-air surface-level lots. Maintenance and construction of these are low compared to multilevel or underground parking options.
- Covered lots: These are the same as exterior parking lots except that they have a roof over the parking spaces, typically held up by pillars.
- Multilevel parking garages: Usually very expensive, these types of parking lots are generally present in large-scale commercial operations such as entertainment venues, shopping malls, and theme parks.
- Valet parking: Often seen in higher-end apartments, condos, retail areas, and restaurants, valet services will typically use off-site parking options such as underground or exterior lots to service the parking needs of customers and tenants.
- Private parking lots: There may be private parking lots nearby where investors can arrange a bulk renting of spaces for use.
- Parking rental companies: As technology innovation is disrupting all industries, startups have entered the parking game. Consider JustPark, which allows owners of parking spots to rent those out through the app. It's the Airbnb and Uber (NYSE: UBER) for parking spots.
The bottom line
For residential builds, you may require one to two parking stalls per livable unit, but this varies widely by the municipality, property type, and location within the city or town. On the commercial side, there will be a formula you'll need to satisfy based on the type and size of your business operation.
When considering how much parking is needed for a particular project, there are a number of factors to consider. The most important of these is your local zoning laws and officials, who can tell you the exact amount of parking needed for your type of real estate project.