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i <br /> I <br /> The Economics. of Downtown Parking July 2007 Page 5 <br /> <br /> I <br /> PUBLIC POLICY <br /> Parking is a cost of doing business, and available parking affects the rent and desirability of <br /> downtown locations. Parking is especially important for high-traffic, service businesses. Because <br /> these businesses need to remain competitive, they cannot shift all of the costs of parking onto <br /> their employees or customers. Therefore, the costs of parking are incorporated into the <br /> occupancy costs for downtown businesses, and may add 5% to 10% to the effective rental rate of <br /> downtown space. <br /> What is the role of public policy and subsidized parking? In larger cities, for example, in <br /> Portland and Seattle all-day parking cost between $15 and $20 per day (in 2001), which <br /> generates between $3,000 and $5,000 per space per year. In 2001, the costs of parking per space <br /> per year were about $1,700 fora 3-level parking structure and $700 for an open surface lot.. <br /> Private development of parking makes sense in these types of locations, not only to support the <br /> developer's own office development, but also as a stand-along parking business. <br /> In smaller cities, the profitability of parking is less certain, because facilities are not able to <br /> charge the same kind of prices per space. Surface parking may be good business, if land values <br /> are lower, bringing a developer a reasonable return at low risk, as well as providing the <br /> developer an opportunity to bank the land for future development possibilities. In these cities, <br /> private development of structured parking is less likely because there are fewer sites with high <br /> land value and nearby high-density development. Public policy in smaller cities is a tradeoff: a <br /> subsidy maybe required to get the density that downtown planners want. <br /> r, _ ~ <br /> . ' . <br /> <br />