Developers Reduce Parking via Car Sharing

This article appeared in the 2019 Summer issue of Urban Land on page 64.

Incentivized by city parking policies, private developers provide fewer parking spaces or increase density in new projects.

Increasingly, cities are using parking policies to stimulate shared mobility through alternatives to personal ownership of automobiles. In the recent adoption of its 2040 plan that permits duplexes and triplexes in most single-family-detached zones, the city of Minneapolis commits to “lead by example in city-owned parking facilities by supporting carpools, vanpools, and shared mobility vehicles which encourage private parking facility owners to do the same.” Car sharing generally refers to a fleet of vehicles offered for short-term rental by private or nonprofit companies.

The city of Austin, Texas, amended its zoning code to reduce minimum off-street parking requirements by “twenty (20) spaces for every car-sharing vehicle provided in a program that complies with its requirements,” under which it approves binding contracts between developers and car-sharing companies to gain reductions of up to 40 percent of required off-street spaces. Nick Vetsch, a market specialist for car2go, a car-sharing service owned by Daimler AG, the Stuttgart, Germany–based automobile company, says that on just three Austin projects alone, Austin developer Lincoln Ventures reduced parking spaces by 160. He says that at about $35,000 per structured parking space, that equates to about $5.6 million.

And he notes that in about three years, the Austin program eliminated the need for about 1,100 parking spaces, saving developers over $38.5 million. Lincoln Ventures’ 2204 San Antonio is an 18-story student housing project located in a dense urban neighborhood one block from the University of Texas at Austin. Its two Ruckus projects are seven-story-tall student housing buildings about two blocks from that campus. Vetsch says that university neighborhoods are one of the prime locations for car sharing not only for their density and limited parking, but also for their younger demographic groups, who seek a less car-centric lifestyle. He says that sometimes several students gather together to use car2go for one-way trips to a common destination. Vetsch notes that cities like Austin do not have frequent transit service during nighttime when many students return from events.

One-Way versus Round-Trip Model Competitors

Zipcar, a competing car-sharing service now owned by its parent, Parsippany, New Jersey–based Avis Budget Group, the largest car-sharing service with 12,000 vehicles, is in more than 360 American cities in 42 states and has cars at over 600 universities in North America. Zipcar operates primarily a round-trip model under which the car must be returned to the location from which it was taken.

With 5,700 vehicles and 1.23 million members in North America, car2go operates a one-way-trip model that enables a member to pick up the nearest car and park it anywhere within the home area of the city in which it is located. With rates that vary among cities, car2go has a $5 membership application fee but no annual membership fee. In Austin, it charges $0.47 per minute, $19 per hour, or $89 per day. Vetsch says that average trips are under 20 minutes and cost $6 to $8. Zipcar has a $25 membership application fee and a $7 monthly fee. A typical Zipcar charge is $7 to $10 per hour (one-hour minimum) and between $60 and $90 per day, depending on the car. Car2go rents Mercedes Smart ForTwos, and Mercedes CLA and GLA sedans. Zipcar rents a variety of vehicles including Honda Civics and CRVs, Jeep Renegades, and some pickups.

Stimulus of Free Parking

Car-sharing services include gas, insurance, cleaning, maintenance, and parking. Parking pricing can be a significant motivator to use car-sharing services, especially where downtown parking is scarce or expensive, or both. Most of the cities in which car2go operates (Seattle, Portland, Vancouver, Calgary, Montreal, Minneapolis, Denver, Austin, San Diego, New York City, Chicago, and Washington, D.C.) now provide on-street parking within an agreed-upon home area that is free to the user, although not always to the service company, which may pay for actual time used or a fixed fee per car in its fleet, or may have free use of on-street spaces designated for car-share use only. Parking that is free to the user can be an important stimulus to use the service compared with parking rates in office buildings and apartments that can often exceed $300 per month.

In May 2018, New York City faced considerable opposition when it announced that it would be reserving 285 parking spaces for exclusive use by Zipcar and Enterprise CarShare during a two-year pilot program under which the companies pay a one-time $765 licensing fee to participate, no fee for the on-street spaces, but monthly parking fees for use of the city’s municipal lots for 55 of the cars. The city government justified its action on the basis that a single shared car serves approximately six to 10 users, lessens the reliance on individual cars, and reduces traffic congestion and greenhouse gases.

However, opponents argue that whenever a shared car is in use, a parking spot reserved for its use remains empty, thereby reducing parking supply; and the more the shared car is used, the more it contributes to congestion and pollution. New York followed San Francisco’s example a year earlier in which the San Francisco Municipal Transportation Agency (SFMTA) approved a program to allocate 1,000 on-street parking spaces for exclusive use by car-sharing companies for rates between $54 and $156 per space per month. The move drew opposition similar to that seen in New York, but it also gained support, its staff said, from among the city’s 140,000 car-share members.

Ride hailing refers to individually owned cars offered through a network for single trips (e.g., Uber and Lyft), while ride sharing refers to multiple passengers in such a car with similar trip destinations (e.g., Uber Pool). Car sharing requires parking spaces in congested locations. Ride hailing and ride sharing do not, but they generate more vehicle miles traveled (VMTs) since cars must travel to and from hailed rides.

City and State Incentives

In Denver, the zoning code allows parking space reductions of five required off-street spaces for each on-site car-sharing program space provided. In Portland, for every car-sharing parking space that is provided, the motor vehicle parking requirement is reduced by two spaces, up to a maximum of 25 percent of the required parking spaces. Denver also issues on-street parking permits to car-sharing companies for $850 per vehicle, but users can park cars in those spaces free, without time limits. The states of Colorado, Minnesota, and Florida exempt car-sharing vehicles from the daily car rental fees charged for conventional car rentals, or they charge reduced fees. Arlington County, Virginia, provides reductions of up to 50 percent of minimum parking requirements for car-sharing agreements that are at least three years in duration.

Developers in and around downtown Denver have contracted to use car2go at varying numbers. At the Grand Apartments in the LoDo (Lower Downtown) district of Denver, San Francisco–based Shorenstein Properties developed 508 units with 446 parking spaces (a 0.9 parking ratio) at 1777 Chestnut Place in two buildings—a 12-story brick-faced building and a 24-story glass building. They share a single car2go car and space. At RiDE at RiNo (River North), the Denver-based McWhinney investment and development company developed 84 micro-studio units in a five-story building at 3609 Wynkoop Street with 42 parking spaces (24 of which are surface spaces), including four car2go spaces to ameliorate its lower 0.5 parking ratio. Car-share proponents say that a single shared car can serve six to 10 users, so its effective parking ratio could be closer to approximately 0.8 space per unit. The Denver-based Urban Villages Group developed the 74-unit, 10-story Vita Flats at 101 Grant Street in the SoBo (South of Broadway) district with 25 off-street surface parking spaces (0.3 per unit), including an Enterprise CarShare rental. While these three projects collectively saved developers building 30 spaces under the code, they were apparently selected more for competitive reasons than to increase effective parking ratios.

To obtain parking reductions, developers must execute agreements with approved car-sharing companies acceptable to the city. Typical agreements must last for an extended period of years. The owner must provide access to the agreed-upon number of spaces reserved for car-sharing vehicles outside any gate-restricted areas so that any member of the public who is a member of the service can access the cars. The car-sharing company agrees to market the service to tenants, insure and maintain the cars, monitor use, and report to the owner and to the city.

Office Car-Share Uses

Most of the parking reductions under codes are not limited to a specific use. There could be significant advantages for office building developers to provide car-share parking spaces where transit is available. Office tenants would have an incentive to take transit to the office and avoid monthly parking fees if they know that a shared car is available to take to less accessible meetings and for personal use during the day when needed. Vetsch says that car2go provides discounted business account options for companies willing to offer car sharing as part of their mobility program. A statute passed in the state of Washington offers Commute Trip Reduction (CTR) tax credits to employers of more than 100 people of up to $60 per employee per year for those who use the employer-sponsored car sharing regularly.

Some office developers have purchased small electric vehicles for tenant use to enhance efficient use of existing parking resources. The Russell Development Company in Portland bought a three-wheeled electric vehicle for its 200 Market office building. The capital cost of such a small vehicle can be less than that of a structured parking space, and building owners could include the operating costs of the vehicle in pro-rata common-area charges.

Hotel Car-Share Uses

Hotel developers also may benefit from including car-share parking spaces to reduce total numbers of parking spaces, or to more efficiently use the expensive parking spaces they do develop. Air travelers may prefer avoiding round-trip car rentals in favor of a one-way car-share trip between airports and hotels that do not have frequent transit at their arrival or departure times. Where hotels charge for parking, car-share vehicles—which do not incur such parking charges—may be more attractive to hotel guests or to their business employers. Some hotel guests may prefer to use car-share vehicles on an as-needed basis in preference to round-trip car rentals, which do incur parking charges in hotel garages. Car2go has partnerships with park-and-fly companies at several airport parking areas, and Zipcar vehicles are at more than 50 airports.

Some luxury hotels have purchased their own cars and offer their use to guests. For example, the Peninsula Beverly Hills offers a silver Rolls-Royce and six Nissan Infiniti cars. The Four Seasons Resort and Residences Vail in Colorado offers a Mercedes SUV for guest use. The Balboa Bay Resort in Newport Beach, California, offers a Maserati. Also in California, the Carmel Valley Ranch in Carmel and the Epiphany Hotel in Palo Alto offer BMW i8s. The St. Regis Hotel in New York City offers its house Bentley with driver.

Luxury Condominium Car Sharing

Increasingly, condo developers are using car sharing as an amenity and as a service. Some developers of expensive condominiums are choosing to provide their own cars for use by unit buyers. New York City–based Tishman Speyer partnered with Audi on a pilot program called Audi at Home to provide, for $12 to $22 per hour, eight luxury cars parked near the valet area of the 42-story, 656-unit Lumina condominiums in San Francisco, located in the the South of Market (SoMa) neighborhood at Main and Folsom streets near the waterfront. It gets about 100 rentals per month. The developer limits other parking to one car per unit and gives buyers a $10,000 credit if unused.

Burnaby, British Columbia–based Bosa Development’s 41-story, 215-unit Pacific Gate tower in San Diego offers four Mercedes-Benz vehicles—two sedans and two SUVs—leased by the condo association for residents’ use, at no direct cost to residents, but a portion of association dues goes toward transportation services.

Developed by the New York City–based Albanese Organization, the 293-unit Solaire in Battery Park City in Lower Manhattan offers several BMW sedans through BMW’s subsidiary ReachNow. ReachNow and car2go are in the process of integrating after a merger closed in January 2019. In a 293-unit building with only 55 parking spaces, that program allowed one resident to give up her car and save the $700 per month she paid to park it.

Milan-based Bizzi & Partners Development—the developer of the 112-unit, 30-story 565 Broome condominium tower, designed by Renzo Piano, in Manhattan’s SoHo (South of Houston Street) neighborhood—offers 24-hour access to car2go/ReachNow’s BMW 3 Series electric vehicles on site for owners who prefer that option rather than paying $550,000 for one of 40 private parking spaces in its robotic parking garage.

New York City developer JK Equities is developing 1000M, a Helmut Jahn–designed 323-unit, 74-story condominium tower at 1000 South Michigan Avenue in Chicago that will provide a luxury SUV and a driver to transport residents to places within a three-mile (5 km) radius.

Developers Use Car Sharing to Support Density

Because structured parking can cost more than $40,000 per space, and because developers generally do not make money on building or selling parking spaces, but rather on the uses they support, careful developers want to build the fewest spaces possible and maximize their use. The lower the effective parking ratio, the more units that can be supported by that parking. Over 18 years ago in a project called Gaia in Berkeley, California, developer Panoramic Interests’ Patrick Kennedy provided two cars on triple-stacked mechanical park-lifts available for all tenants as an in-house car-sharing service in the 91-unit building. Kennedy noted, “If three private cars can be replaced by one shared car, and that one shared car is stored on a triple-stacked lift using the space equivalent to one-third that of the surface-parked car, then the space typically dedicated to one private car can be used to provide auto transport for nine households.” (See William P. Macht, “Pioneering Park Lifts,” Urban Land, February 2001, pages 30–31.)

With increased acceptance of car sharing nowadays, the multiplier may have doubled. That kind of efficiency can enable developers to add an additional floor of units, which is far more profitable than building parking spaces. And, they can increase density in urban and urbanizing areas. The next level of efficiency can come as developers of mixed-use projects, with different peak parking demands, encourage cities, lenders, and tenants to stimulate car sharing combined with shared parking.

WILLIAM P. MACHT is a professor of urban planning and development at the Center for Real Estate at Portland State University in Oregon and a development consultant.