Car parking can be a thorny issue for high-density residential development. This post looks at the “cost” side of the equation: how much does it cost to provide carparks within a residential development?
I’d better start with a disclaimer: I’m an economist, not a quantity surveyor, and the figures I’m using here are just for discussion purposes on this blog. Costs can vary widely from project to project, and if you want a detailed cost estimate, you need to talk to a professional in that field.
The cost of a carpark varies massively depending on where it is, and whether it’s a flat piece of land, above ground in a multi-storey building, or in a basement.
There are plenty of trade-offs involved between these options: with parking above ground, for example, you might end up losing ground-floor space that you could otherwise use for retail or apartments with courtyards, and there might be urban design or public interface issues. You’re also going to be building higher than you would otherwise, which means that some of the apartment buyers might get a better view, but the construction becomes more complicated and you might run up against the height limits for the area.
And basements can just be really expensive.
Ground level car parks
The simplest situation is ground level (or “at grade”) car parks, on the flat with nothing above them. These are pretty cheap to create: lay some bitumen, put some kerbs around the edges and paint the lines on. The build cost might be $70 or $80 a square metre. The real cost, though, will be the land itself, and in Auckland this could be just about anything. It could be $500 a square metre or $1,500, depending on the area and the zoning.
Of course, if the land costs $1,500 a square metre, you probably don’t want to be using it for surface car parking – you want to be building on it instead. With a parking building, or a basement plus some other kind of building on top, you’re spreading the land cost out and it becomes less of an issue.
A carpark takes up about 15 square metres, but by the time you take circulation and access into account, you’ll only get one carpark for every 28 to 30 square metres of area in a parking building or basement.
Basement carparks/ above ground carparks
For a partly underground carpark – one where you’ve got to do a bit of digging, but not too much (you might already be on a sloping site, for example) – the construction cost will come in at $900 a square metre, if you’re lucky. For a full basement, you’ll be looking at $1,500 a square metre or more.
As for above-ground carparks in a multi-storey building, this can cost $700 a square metre or more.
GST and other costs
Then you add in professional fees, finance costs, local authority costs and contingencies. These costs might come to $150-$300 a square metre, depending on the type of parking.
Oh, and all of the costs above exclude GST, except for land costs where it tends to be factored in already. For your construction costs and all the other associated costs, you can add GST on at 15%. Overall, the cost to build a carpark in a basement, or in a multi-storey building, can be between $30,000 and $50,000 (or even higher) once everything’s accounted for and GST has been added.
Adding a developer into the equation, and what carparks mean for development
I’ve also excluded the developer’s profit margin in the above (very rough) costs. However, the car parks have most likely been built by a private company which does indeed want to make a profit, and wants to be compensated for the risk involved in undertaking a development. This could increase the final sale price even higher.
When the carparks are part of something like an apartment block or office building, though, it’s more likely that the developer will end up losing money on every carpark he sells.
The developer has to make this loss up elsewhere, by making a larger profit on the sale of the actual apartments. Essentially, those apartment sales have got to subsidise the carparks. They will have to be sold at a higher price than they otherwise would, but that’s not too worrying – these days there is an established apartment market with established prices and plenty of buying and selling going on, and it’s hard to charge inflated prices for a new development.
What I find more concerning is the idea that some developments simply won’t go ahead, because the money that the developer can make on the apartments isn’t enough to compensate him for the loss on the carparks and the risk he’s taking.
Increasingly, developers are selling carparks as optional extras, rather than bundling them into the price of an apartment. Merchant Quarter in New Lynn is a good example of this, and the trend is likely to continue. Carparks at Merchant Quarter are up for grabs for $35,000, including GST.
Of course, things like Minimum Parking Ratios can throw a spanner in the works – it’s harder for developers to sell carparks individually when they’re obligated to provide a certain number.