When Joe Starkman told his development lawyer his plans to build the first condominiums in Calgary without parking spaces, the response was less than encouraging. “All the baby boomers I talked to, at first glance, said ‘you’re nuts.’ To us, that was the right answer,” said Starkman, a developer in Calgary and the owner of Knightsbridge Homes.
Parking spots in big cities in North America are becoming increasingly more expensive: a condo development in New York City’s SoHo neighbourhood made headlines this month for charging $1-million apiece for a space. In Toronto, parking spots in downtown condos cost anywhere between $50,000 to $75,000 each, according to data collected by BuzzBuzzHome; a few years ago, a parking spot at the Four Seasons hit the $100,000 mark.
In Calgary, Starkman says his condo units would skyrocket to $270,000 from $200,000 if he added parking — a price he doesn’t believe his under-30-target market will go for.
“Owning a car is not a priority like it was for [the previous generation],” he said.
A new generation of young homebuyers who don’t own cars is greening the market and developers are starting to take note by adapting how much parking they build.
The road transportation sector accounts for 74 per cent of global carbon emissions and about 24 per cent of Canada’s greenhouse gas emissions, according to Statistics Canada’s latest data from 2010.
Last week at the UN climate talks, Canada reiterated a promise that it would bring its vehicle-emission regulations in line with the United States, the day after more than 300,000 people took to the streets of New York in the largest climate change demonstration in history.
When Starkman’s company conducted market research, over 50 per cent of the under-30s they talked to, he says, didn’t own a car, and nearly 25 per cent didn’t have driver’s licenses.
Other developers across the country are witnessing a similar trend: “Parking is not as important as it was five to 10 years ago when you’re purchasing a condo,” said Rizwan Dhanji, the vice president of sales at Canderel, a development firm in Toronto.
In the past six years, Dhanji’s firm has drastically cut down the number of parking spots they build: a condo building they developed in 2008 had a 60 per cent parking-spot ratio to the number of units in the building, while a project planned to be built just up the street will have a mere 21 per cent parking-to-unit ratio.
“I’d love to say that the cities are driving this because a lot of cities are trying to take action to encourage lower amounts of parking being provided, but I think that, overall, the market is kind of leading the trend.”
Indeed, if Dhanji can’t sell the spots, he says, he’d rather not build them.
“We lose money on every parking space that we build,” he said. “The excavation, the shoring cost, and the forming costs and all that are just adding up and because the sites are so tight, it’s very difficult to go underground in these really small spaces.”
And that’s on top of the ongoing costs to light, heat and ventilate every parking space after it’s built.
Historically, cities have mandated minimums for the number of parking spots a developer must offer to residents within a building, but builders can apply for alternative parking rates for new developments on a site-by-site basis, generally through a zoning bylaw amendment.
Sometimes, municipalities themselves adjust these thresholds to promote public transit or reduce congestion and greenhouse gas emissions, but more often it’s the developers who are ahead of the curve and apply for bylaw exemptions to build below the parking minimums, said Mark Hutchinson, the program director at Canada Green Building Council.
“I’d love to say that the cities are driving this because a lot of cities are trying to take action to encourage lower amounts of parking being provided, but I think that, overall, the market is kind of leading the trend,” Hutchinson said.
Rather than offering parking, Starkman’s Calgary project, N3, is on the transit line and comes with a bike and lifetime carshare service membership with a $500 credit upon purchase.
Brian Persaud, a realtor with Re/Max in Toronto, sees the situation differently. From his experience, he says, people prefer a parking spot if they have a choice, and parking is still a priority for those buyers willing to spend $350,000 or higher on a home.
“Once you get to a certain price range, a condo not having a parking spot makes the condo less likely to be sold — that means the market is still demanding parking spots as of right now,” he said.
This could be for a number of reasons, he says: many older condos for resale have plenty of parking available, and often the people in the market for a more expensive condo have families and a car.
But Persaud added he notices younger buyers are not as concerned about parking because they’d rather save that money and put it into the mortgage.
In the meantime, Persaud said his older clients still want a spot, even if they’re not driving every day.
“I have some clients that do have parking spots and they don’t use their car to the point that when they’re ready to use their car, the battery is dead, so they have to go downstairs and unplug the battery.”
Here is a glimpse of parking-spot prices in new condos across Toronto: