The Cost of Parking

Value of Parking

The value of a parking space in front of a business store front in a merchant district can be significant. Convenience plays a major role in attracting customers, especially in urban areas like San Francisco where parking can be challenging. Having a parking space right in front of a business can lead to higher foot traffic and increased visibility, which could translate into higher sales.

Studies have shown that easy accessibility, including convenient parking, positively influences consumer behavior. Customers are more likely to visit a business if they can easily find parking nearby. In contrast, if parking is difficult to find or located far away, potential customers might be discouraged from visiting, which could lead to lost sales.

Moreover, in a city like San Francisco the need to support small businesses needs to be a priority, providing accessible parking can make a significant difference. Customers who value supporting local businesses might be more inclined to patronize establishments that offer hassle-free parking options.

Real Cost of Parking

If a parking space is removed or becomes less accessible, it could potentially lead to a decrease in foot traffic and sales. It will have a broader impact on the overall nightlife and vibrancy of the merchant districts, as people might be less inclined to spend time in the area if parking is inconvenient.

In terms of transparency in government, having clear and easily accessible data on how parking availability impacts businesses could be crucial for informed decision-making by local authorities.

It's clear that a parking space in front of a San Francisco business in a merchant district can have a significant impact on sales and the overall vitality of the area. Supporting such businesses through convenient parking aligns with the values of promoting small businesses and supporting the local economy.

Location and Demand: The cost could be influenced by the demand for parking in the area. In prime locations with high foot traffic, the value of a parking space would likely be higher due to increased customer potential.

Type of Business: The nature of the business matters. For example, a restaurant might benefit more from a nearby parking space than a boutique that thrives on foot traffic and window shopping.

Sales Volume: You estimate the value based on potential sales. If you know the average transaction value and the number of potential customers, you could calculate potential revenue generated from a parking space. (1 space X space turns X hours of operation = $)

Competition: If there are alternative businesses nearby offering similar products or services, having a convenient parking space could become a competitive advantage.

Time and Convenience: Consider the convenience factor for customers. If the parking space saves customers time and hassle, that could translate into a higher perceived value.

Cost of Rent or Lease: In urban areas like San Francisco, businesses often pay rent for their storefronts. The value of a parking space could be related to a portion of the storefront rent.

Government Policies: Cities have policies that regulate parking space pricing. This has an impact on the value you place on a parking space.

Local Economic Factors: The overall economic health of the area can influence how much customers are willing to spend, which in turn affects the value of a parking space.

Parking Checklist

How to Calculate Cost

Estimate Potential Revenue Impact:

• Calculate the average transaction value of your business.

• Estimate the number of potential customers who might visit your business if there's a convenient parking space.

• Multiply the average transaction value by the potential number of customers to get an estimated increase in revenue

Consider Opportunity Cost:

• Assess the opportunity cost of not having a parking space. If customers are deterred due to parking difficulties, estimate the potential loss in revenue.

Factor in Rent and Operating Costs:

• Determine the rent or lease cost of your storefront. If the parking space directly benefits your business, you could allocate a portion of this cost to the parking space value.

Analyze Foot Traffic:

• Consider foot traffic data in the area. If your business is in a high-traffic location, the value of a parking space could be higher.

Evaluate Competition:

• Research if your competitors have convenient parking spaces. If not, having one could be a competitive advantage.

Customer Convenience and Retention:

• Estimate the value of customer convenience and retention. A convenient parking space might encourage repeat business and customer loyalty.

Factor in Local Policies:

• Be aware of any local policies or regulations that could impact parking space value. Some areas might have pricing regulations.

Consult Experts:

• Reach out to real estate professionals who specialize in commercial properties. They might have insights into how parking spaces affect property values.

Conduct Surveys:

• Consider conducting surveys of your customers or potential customers. Ask them about the importance of parking in their decision to visit your business.

Evaluate Trends:

• Research trends in the area. Is the neighborhood growing in popularity? Are there new developments that could affect parking demand?

Estimate Urban Merchant District

Hours of operation = 10 hours of sales

People arrive by foot or bike = 30% (1-2 blocks)

People arrive by road vehicle = 70%

Daily average gross sales = $2500

Average transaction = $50

The price of a parking space varies by neighborhood and type in San Francisco. Real estate agents often do their own adjustments when comparing properties with and without parking. My rule of thumb for an independent parking space in a dense neighborhood with challenging street parking is $80,000-$100,000. 05-2023 (residential)

How is parking demand calculated? The formula for parking demand calculates the parking space number into the average time a car rests in the parking lot. If the parking space is full with four cars during peak time, you have 150 spaces for that instance. The parking supply you provide is for 600 cars in peak time.

Example: Parking on Geary between 14th and 25th at a meter on a Monday 10:00 AM - 12:00 PM is $6.00.

Questions: What is the opportunity cost for the merchant? What if parking was free during commute hours? Would this reduce congestion? Would this increase retail transactions in the commute hour day part?