
How Much Money Do Parking Lots Make? - dpflan
https://melmagazine.com/en-us/story/how-much-money-do-parking-lots-actually-make
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onlyrealcuzzo
At least in California, especially in Los Angeles, it's really important to
factor in that parking lots -- even on land worth $10M+ -- often pay property
taxes as little as $100-$1000 a year (thanks to Prop 13).

You buy a parking lot, sit on it as the value of land increases (paying
effectively 0% in taxes), then you eventually sell, paying only a capital
gains tax (much lower than income).

I only bring up California, because I know it. I'm sure there's similar dodgy
tax advantages in other states.

Point being -- taxing land the way we do (especially in California) seems to
be problematic.

This is also the reason you see single family homes with front and back yards
like 1000 meters away from sky scrapers in Los Angeles and San Jose. Those
homes are paying property taxes of like $400 a year, and most of them are
being rented out. It's not poor old ladies living in them that don't want to
leave the neighborhood they lived their whole lives in, but gentrified under
their feet into some urban monster. It's business people arbitraging tax laws.

~~~
asokoloski
Exactly. Taxing property encourages speculation and under-development.

Showing an alternative, Pennsylvania has several towns and cities with a
split-rate tax, which means that there's a higher tax on the assessed land
value than on the assessed value of the property. Taking this to an extreme,
you can tax only the land value, not the property, providing a very strong
incentive to make the best use of desirable land. A split rate tax just lets
you turn the dial between typical property taxes and a land tax.

Many arguments in favor of the land value tax are based in concepts of
economic rent and fairness. While I'm sympathetic to these arguments, I think
the best argument is that it seems to work, both in theory and practice.
Places that implement a split rate or land value tax tend to have fewer empty
lots, parking lots, single-family homes in the middle of downtown, etc.

And not just that, but typical property taxes provide a disincentive to even
improve your own property, since you'll pay more tax. They encourage blight.

It's not just California, it's everywhere. Tax policy isn't the only thing
stopping us from avoiding sprawl by "thickening up" valuable areas of towns
and cities, but it's a big one. Parking minimums are another, and of course
zoning is yet another. All of them are important in terms of making our cities
walkable, amenable to public transit, and sustainable environmentally.

*edit -- I should clarify that Prop-13 makes this effect worse in California than many places, though.

~~~
thatfrenchguy
> And not just that, but typical property taxes provide a disincentive to even
> improve your own property, since you'll pay more tax. They encourage blight.

A good old wealth tax on everything would fix that.

~~~
briandear
Most OECD countries have dropped wealth taxes. They don’t work. In 1990, 12
OECD countries had wealth taxes, now, only 4. A wealth tax has a lot of
unintended consequences and while it sounds good as a populist sound bite,
reality isn’t so simplistic.

~~~
pjc50
Do you have a history of this - was it just that the ownership was moved
offshore? Did they "not work" or was it just lobbied against?

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andys627
I like this billboard from the good old days
[https://upload.wikimedia.org/wikipedia/commons/thumb/a/aa/Ev...](https://upload.wikimedia.org/wikipedia/commons/thumb/a/aa/Everybody_works_but_the_vacant_lot_%28cropped%29.jpg/1024px-
Everybody_works_but_the_vacant_lot_%28cropped%29.jpg).

It says: "Everybody works but the vacant lot. I paid $3,600 for this lot and
will hold till I get $6000. The profit is unearned increment made possible by
the presence of this community and enterprise of its people. I take the profit
without earning it."

These lots produce negative externalities to society and should be taxed
accordingly.

~~~
badpun
If it was 100% guaranteed that the lot will be worth $6000 in a couple of
years, it wouldn't be sold at $3600, but something much closer to $6000. The
gentleman buying the lot is obviously taking on risk - the lot may very well
never be worth $6000, or may even never again be worth $3600.

~~~
La1n
This is not necessarily true though. If you could use that 3600 to become 7000
in the same time it would definitely make sense to sell for 3600, and reinvest
that money into a even more profitable investment.

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icsllaf
I'll never understand how articles like this always talk about Uber and never
about public transportation.

[https://en.wikipedia.org/wiki/AirTrain_JFK#Ridership](https://en.wikipedia.org/wiki/AirTrain_JFK#Ridership)

>The AirTrain's ridership has risen each year since then. In 2017, there were
7,655,901 passengers who paid to travel between JFK Airport and either Howard
Beach or Jamaica. This represents a 292% increase over 2004, the first full
year of operation, when 2,623,791 riders paid.

>An additional 12.6 million people are estimated to have ridden the AirTrain
for free in 2017.

When such an answer already exists, there is no reason to even ruminate on
self driving cars.

~~~
baroffoos
It seems that to Americans, public transport is unthinkable and the mere
suggestion that it could be a solution is met with shock and horror since the
only public transport they have ever known is the American kind with useless
timetables and primarily used as homeless housing.

~~~
Ambele
The timetables could be deemphasized if you could see the public
transportation moving live on a map. The homeless housing aspect could be
reduced if a phone or app was required for the upscale public transport.

~~~
baroffoos
>reduced if a phone or app was required

No thanks. I don't want government mandated spyware on my phone. Its shocking
that your solution is to try and ban poor people from public transport rather
than providing them a proper place to stay.

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TaylorGood
I know a family that own a parking lot at LAX, as well as a parking lot across
from Staples Center in LA. Safe to say it is their crown jewels of assets.

The irony is that the father didn't want these, but they were thrown into a
financing deal that he was on the other side of.

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riffic
How much money does a parking lot impose in external costs upon society?

[https://www.streetfilms.org/parking-craters-a-scourge-of-
ame...](https://www.streetfilms.org/parking-craters-a-scourge-of-american-
downtowns/)

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gumby
This is sadly true: about 10 years ago when self driving cars were on the
horizon* I looked into buying some parking lots in Manhattan and SF figuring
that I could get a good price now and turn them into something valuable down
the road.

Turned out the people who owned them weren't dummies and had the same
strategy. The prices I could get (and few were even willing to talk) were
enormous multiples of likely revenue: basically the price of a buildable city
lot where you didn't have to demolish an existing structure.

* They seemed only a decade away. Now, 10 years later, they are only a couple of decades away. Like fusion power.

~~~
cylinder
There's no logic to thinking of parking lots as different to any apartment or
office tower. They are an asset that generates rental income. The value of the
parking lot will be based on the rental income as well as the development
potential of the land.

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dpflan
I found this article while doing cursory research on the economics of parking
lots and booting. My assumption is that when booting companies could charge
booted cars to remove the boot on the spot (i.e., on-site credit card reader),
then booting became a more serious side-business for businesses that have
parking lots (add in CV-monitored parking lot technology - automated
delinquent detection).

I have more research to do; if you any insights/knowledge, my curiosity
compels me to ask that you share. ;^)

~~~
amatecha
By "booting" do you mean "towing"? I'm from western Canada and have never
heard the term "booting" before in relation to parking lots and what I assume
must be towing.

~~~
mkmk
Booting refers to wheel clamping
[https://en.wikipedia.org/wiki/Wheel_clamp](https://en.wikipedia.org/wiki/Wheel_clamp)

~~~
amatecha
Aaah interesting -- thanks!

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ensiferum
How about just making it a private "no-parking" area and then towing the
wrongly parked cars into a pound and asking a nice fee to have the car
reclaimed at $500 apiece?

Like here

[https://www.youtube.com/channel/UCPLjrMiMW2zSIMNZjjSRjQw](https://www.youtube.com/channel/UCPLjrMiMW2zSIMNZjjSRjQw)

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yellowapple
> Bear in mind, though, an ideal lot wouldn’t be full of only office workers.
> They’re parked there all day! Ideally you get shoppers, who turn over their
> parking spot every hour or two.

I wonder how much this actually matters? Money is money, whether it's coming
from one person parked for 8 hours or four people each parked for 2 hours.

Sure, most lots will charge a somewhat lower rate for a longer period of time
(i.e. the per-hour is less than three per-20-minutes, the per-four-hours is
less than four per-hours, etc.), but if lots really do prefer short-duration
parkers over longer-duration parkers, then it'd make sense for them to just
not incentivize that behavior and charge a flat rate (or even invert it), no?

~~~
hnick
Guaranteed money is better than maybe-money too. Most operators will take a
guaranteed 8 hours compared to maybe filling a spot later. Taking this to the
extreme, many places here sell monthly packages for commuters.

The variable hourly-rates is also a form of price anchoring and takes
advantage of sunk costs. Look at Westfield's Sydney CBD rates here:
[https://www.westfield.com.au/sydney/parking](https://www.westfield.com.au/sydney/parking)

Once you pay that first $35 it's not so bad to stick around and spend a bit
more. Westfield has a vested interest in this since they run the shopping
centre, but other local operators have to compete with this so can't be too
much more expensive.

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seansta
If you in Sydney, Australia (in the CBD, which is downtown) your looking at
$65 USD per day. Absolute rip-off.

~~~
batiudrami
Demand better public transport, then. It's the solution for every other city
in Australia.

The CBD shouldn't be for cars.

~~~
9nGQluzmnq3M
Sydney has pretty decent public transport, at least by Australian standards,
and most certainly compared to any US city of comparable size. I never park my
car in central Sydney on a weekday, and have never been particularly
inconvenienced by that cost.

~~~
hnick
Yes after 5pm weekdays and on the weekend there are plenty of flat rate places
for $15 or about $10 more towards the north end of town.

I just wish they'd build more parking near some of the suburban train
stations. It's usually OK far from the CBD, but a park and ride strategy would
definitely help at places 15-20 minutes out. Mascot and Green Square have both
gone through a lot of development, are expecting a lot of new people, and
still have tiny roads with no dedicated parking near stations.

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TomGullen
Some parking spaces in central London are more per hour than minimum wage

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oarabbus_
Self-driving cars will render these obsolete

~~~
sp332
Is your self-driving car going to take up less space or something?

~~~
andrewmunsell
The idea is that a self-driving car rarely has to park, it can simply drive
around for your entire 8-hour work day after dropping you off. Or, maybe
provide some ride-sharing services instead to be more useful and profitable.

~~~
sp332
I would guess that parking in a parking lot is preferable to continuing to
waste fuel and make traffic worse for the entire work day. Not to mention the
other hours in a day you're not driving it.

~~~
andrewmunsell
Yes, that's a pretty common counterargument. Having a large number of
autonomous cars roaming the streets during the day like zombies isn't really
sustainable. But, with companies like Tesla promoting the idea that you car
could be _productive_ via ride sharing during the day, it might prevent the
cars from at least wandering aimlessly.

Fortunately, many self-driving car companies are using alternative fuel
vehicles (Cruise uses the Bolt, Tesla is obviously electric, Waymo has the
i-Pace and Pacifica Hybrids), and things like inductive charging are also
helpful for complete autonomy so the future of autonomous zombie cars may
involve fewer tailpipe emissions at least :)

