Parking, parking, parking! In many places in many cities – even eco-friendly German cities – the price of parking is distorted by minimum parking requirements (MPRs). In these places, local governments regulate an over-supply of parking, which in turn holds down prices.
The Auckland city centre is not one of those places, as MPRs were removed from the area inside the motorway cordon in the late 1990s. As a consequence:
- New developments provide a lot less parking. For example, the new Commercial Bay building would have had to provide over 2000 carparks if it was subject to the same MPRs as the rest of the Auckland isthmus. It’s actually providing 278 carparks – 85% less.
- The price of parking is higher, as new parking garages must “compete” with other land uses, such as valuable commercial, retail, and residential space. If parking doesn’t pay its way, it doesn’t get built.
Furthermore, the price of parking will tend to rise over time as a result of supply and demand interactions. New demand for parking will tend to be met with increased supply. However, new parking supply will tend to be costlier, as cheap surface carparks are likely to be redeveloped and new city centre parking will increasingly be provided in expensive structures.
In fact, parking fees has been rising. In November 2014, Auckland Transport announced that it would end earlybird discounts – meaning that all commuters would pay an all-day rate of $17 to park. In July 2015, AT hiked the all-day price to $24. Other operators have followed suit. For example, Sky City now charges $22 for earlybird parking – whereas it only charged $14 in 2013.
Of course, not everybody pays to park. According to a 2007 survey of city centre parking spaces summarised in a recent report, there were 22,639 public carparks in the city centre, and 22,121 private non-residential carparks attached to businesses. Here’s the table:
In the Auckland city centre, it is almost always necessary to pay to use public parking – e.g. parking garages or on-street parking. Private carparks attached to businesses may be offered as part of compensation packages, which means that people give up a bit of salary in exchange for a carpark that they don’t have to pay to use on a daily basis. Alternatively, employers may choose to rent them out for a monthly fee.
But here’s the thing. This data suggests that at most 50% of the nonresidential parking in the city centre is being offered free of charge. People using the other 50% must pay to park, either on an hourly or daily basis. The price to park for a day is now in the range of $20, and hourly prices tend to be higher.
In other words, the average price that people pay to park in the city centre could easily be $10/day or more, assuming that 50% of drivers get “free” employer-provided carparks and the remaining 50% pay market rates of around $20/day. Furthermore, the cost for the marginal parking user will tend to be higher, as the removal of MPRs means that they will be more likely to pay full market rates for parking.
This leads me on to the curious case of the Additional Waitemata Harbour Crossing (AWHC). Or rather, the peculiar assumptions about city centre parking prices that are incorporated into the transport modelling for AWHC.
If constructed, AWHC would be New Zealand’s most expensive single transport project – coming in at a cost of $5-6 billion to bore road tunnels under the Waitemata Harbour. A project of this magnitude demands extra-special care to validate all the model inputs and workings and ensure that they are as realistic as possible. Errors on a major project can have costly ramifications.
With that in mind, here are the parking price assumptions from the 2010 business case for the project. (They can be found on page 42 of the project’s transport modelling report.) They assume that the average price to park in the city centre was $2.83 in 2006, rising to $7.72 in 2041:
It is not clear how these assumptions were chosen, but they do not seem plausible. As I discussed above, the average parking cost in the city centre today could easily be higher than the modelling is assuming for 2041. Getting parking prices back in line with the modelling assumptions would require them to fall by perhaps 30% over the next decade.
A reduction in parking prices is highly unlikely without a major policy shift and a boat-load of investment in uneconomic city centre parking garages. In the absence of MPRs, parking must pay its way. It will not be built if it does not provide a competitive return to business or residential floorspace. This means that new parking will tend to be supplied at a considerably higher price than the AWHC modelling envisages.
Lastly, it is worth noting that parking prices can have a significant impact on transport outcomes. Public transport tends to be cheaper than driving if you have to pay for parking – but more expensive otherwise. Consequently, unrealistically low parking price assumptions will bias transport modelling results by inflating demand for driving and depressing demand for public transport and other non-car modes.
What do you think will happen to city centre parking prices?