Why Forward-Thinking Developers Are Rethinking Parking

Parking may not be the most exciting topic in real estate development, but its impact on a developer’s bottom line is anything but boring. In fact, parking policies are undergoing a seismic shift across the U.S., and forward-looking developers are taking notice. Developers are cutting construction costs and adapting to changing policies and consumer preferences by building fewer off-street parking spaces—or none at all.

The following 4 factors are what's driving this shift:

1. Elimination of minimum parking mandates
2. Transportation Demand Management (TDM) policies promoting alternatives to car travel
3. Rising cost of car ownership reducing demand for parking
4. Opportunity to lower construction costs when project feasibility is at risk

1. No More Parking Minimums

Cities across the U.S. are eliminating parking minimums at a breakneck pace. 86 municipal and state governments have removed these outdated policies, according to the Parking Reform Network . A parking minimum is a mandate from a city that a new construction project is required to build a certain amount of parking, even if the developer does not want to or the demand for that location does not justify it. The removal of these parking minimums lets the free market do its work, versus monopolizing an auto-centric lifestyle. As a developer, if you think that parking is needed, you can use your capital and space to build parking - or you can decide to shift towards alternative transportation modes, bringing many other benefits to your development. For example, an e-bike and e-scooter fleet would cost less than constructing a single car parking space.

2. Transportation Demand Management: Shifting Away from Cars

In more than 25 major markets, developers are now required to actively support alternatives to driving through Transportation Demand Management (TDM) policies. These policies aim to reduce Single Occupancy Vehicle (SOV) trips and Vehicle Miles Traveled (VMTs) by incentivizing biking, walking, and public transit use. Instead of overbuilding parking, developers are encouraged to invest in infrastructure and programs that promote sustainable transportation options.

This shift isn’t just about compliance; it’s about creating value. By reducing reliance on cars, developers can save on construction costs while offering tenants a more affordable and sustainable lifestyle. Plus, these strategies align with broader urban trends that prioritize walkability, reduced emissions, and healthier communities.

3. Rising Costs of Car Ownership

The cost of owning and operating a car continues to climb each year, exceeding $12,000 per year, or $1,000 per month, according to AAA. As alternative transportation options become more accessible and convenient, many people, especially the youngest generation, are rethinking car ownership altogether. Meanwhile, the average car sits idle 95% of the time. Savvy developers are recognizing this trend and shifting their focus away from parking-heavy projects.

As owning a car has become increasingly expensive,

4. The True Cost of Overbuilt Parking

Overbuilding parking not only adds significant costs to a development but also drives up the cost of housing. By reducing or eliminating parking, developers can lower costs and pass those savings along to residents.

Overbuilding parking also leads to an increase in traffic congestion and air pollution, while preventing walkability, and penalizing those without automobiles. Oversupply of parking means a higher chance of free parking, further incentivizing people to drive and not use a more sustainable and healthier mode of transportation, leading to increased emissions. As LA-based city planner and author M. Nolan Gray put it in an Urban Land Institute report, “there’s no such thing as ‘free’ parking. Providing parking adds to the cost per unit.” It’s very clear that we have overbuilt parking in the past; now how can we dig ourselves out of it? 

Conclusion

Forward-thinking developers who embrace TDM policies, prioritize alternative transportation, and innovate with new mobility solutions are not just building profitable projects—they are shaping the sustainable, community-focused cities of tomorrow.

Please share this with real estate developers that are seeking guidance on how to enable the cost savings and impact that is possible with these strategies.