While going green has brought about many positive effects in our society, it’s having an unexpected effect on the real estate market. In particular, investors are finding that parking lots aren’t as greatly needed as they once were and the resulting empty lots are serving as visual cues that represent untapped opportunities. As fewer Americans feel the need to own vehicles of their own, multi-family properties are starting to look a little different.
A Ban on Cars
Several cities in the United States, and other cities throughout the world, have already started limiting where and how cars may be driven. While Madrid and Paris have banned older gas-fueled vehicles altogether, New York City has enacted a ban on cars in Central Park. San Francisco has also joined this growing trend by eliminating parking requirements in the city.
These types of bans do more than just restrict how people go about their business in the city. They also reduce the need for car washes, gas stations, and auto mechanics. Similarly, fewer people will see the point in owning their own cars, selling them and leaving the parking lots in their neighborhoods empty. Multi-family property developers are taking advantage of this trend by tearing up these lots and using the land to build additional units.
The Problem With Zoning Codes
Unfortunately, there’s one major hurdle that developers are going to have to overcome. In most cities, the zoning laws require that there be up to two parking spaces for each residential unit. For a multi-family unit that consists of four units, the developer will have to provide enough parking space for eight vehicles. That can significantly hamper any plans developers have for repurposing their parking lot space.
There is a bright side. City leaders across the country are recognizing that there’s a lower demand for parking space as we embrace green technology and driverless cars. In a few areas, the zoning law changes are lightening up the regulations on parking lot space, making it easier for developers to turn their lots into more rental units. As they get the green light to go ahead with their plans, their attention will turn towards the profitability of such a move.
Since this type of project will require a 30-year loan in most situations, developers will have to consider whether or not car bans will continue to be a trend over the next three decades. If not, there may be a resurgence of car owners and, along with it, a reinstatement of those parking requirements. In that case, real estate developers will be faced with meeting those new demands at a greater development cost.