The high cost of developing commercial real estate has started to impact the amount of parking developed with new office buildings, thanks to the popularity of rideshare services Uber, Lyft and others. Employers have begun to offer incentives to keep their employees from driving to work, such as discount cards, passes and other financial incentives. And, apartment communities are offering a rental discount to renters that use the ride sharing services, opposed to parking a personal car on the site.
Although not a new concept in some of the more expensive real estate markets, the general trend has started to change how developers and builders plan their commercial office projects.
In most commercial office and retail projects built in the past decades, there was a certain allowance for each employees to drive a car, to allow room for a parking space for each vehicle. There also had to be parking spaces for customers and clients. There has been a requirement to dedicate 50% or more of the total buildable land lot to a parking lot or a multi-level parking structure in order to provide adequate parking under the old commercial development models.
Times have changed very quickly, and trends seem to point away from the levels of automobile ownership we have seen in the past, with many people choosing to not own a car. This is especially true in cities such as Austin, Los Angeles and New York City where the shift to ridesharing services has accelerated the trend to reduce the number of parking spaces in new commercial real estate projects.
The ride-share concept and the decline in automobile ownership in the Millennials, in combination with the increased cost of land and construction, have made the concept very popular with new commercial projects. The main adaptation to the new concept is an increased pick-up and drop-off area to make the services more easily accessible to the entrance of the mall, shopping center, sports center, office or medical center. Malls are also using the entrance as a drop off point, and offering free coffee or water to the shoppers that use the ride sharing services. Having a convenient, accessible and friendly access point is essential to the concept in the commercial setting. Many airports have been quick to change the layout of the pickup and drop off areas to accommodate the services for travelers.
In addition, the future of driverless cars seems to be around the corner, which will further eradicate the need for shoppers to park their cars at the shopping center. An automated fleet of driverless vehicles could be accessible for periods of non-stop use, and would not like sit idle in a parking space.
The obvious implications for developers is that if they don't have to have many parking spaces, there is more room to build commercial offices, retail spaces and hotel rooms. This could lead to new higher density projects that have almost no arrangements for parking your car on the site. While it's a concept that has long been used in cities such as New York City or Los Angeles, there is a high likelihood that the trend will quickly catch on where land prices are increasing and its location is at a premium.