One of the things that trips a lot of people up when they are scaling up from the fix-and-flip model to mid-sized multifamily development is parking requirements. If you’re trying to build new construction apartments, or even if you’re doing something as simple as adding to the footprint of an existing multifamily building, you’re going to trigger certain parking requirements that are easily overlooked if you’re not being careful in your analysis.
The problem lies in the fact that when you construct a new building or add on to an existing one, you’re going to be restricted by what are known as zoning requirements. These vary from municipality to municipality, and some areas have much stricter zoning requirements than others.
In these circumstances, you’ll be working with a team of professionals to craft your construction drawings, chief among them being your architect. The architectural firm you hire should be well versed in zoning analysis. They should be familiar with the zoning codes of the areas they operate in, or able to quickly study the zoning code as new projects arise.
That’s why your architect is a vital tool when analyzing new projects. We typically perform our own preliminary zoning analysis and then have our architect whip up a rough schematic of what we could build there before submitting an offer on a development lot.
That said, when you’re just starting out, it might be hard to have an architect take you seriously when you aren’t well versed in zoning yourself. In our 5 Tips for Understanding Zoning in Development article, we laid out some of the basic points you need to understand about zoning in order to get started. We also go over this topic in-depth in our Millions through Multifamily Development investor guide.
What’s So Confusing About Parking Requirements?
The truth is, they aren’t all that confusing, but speaking from my own experience when I was just starting out – I can give you an idea of the type of scenario I want you to avoid. This is a mistake we would often make in those early days that wasted a lot of our time.
Imagine you’ve found a great lot for development. You’re a mid-sized multifamily developer focusing on condominium projects where the profit margin might only be tied in to the final few units. What this implies is, due to the acquisition cost of the lot you’re envisioning for development and the cost of construction, the difference between a 6 unit project and a 9 unit project might be more dramatic than a layperson might envision it being.
You’ve looked through the dimensional and use tables for the zone the lot is located within and based on what you see, it looks like you could build a very profitable project! Great news… until you realize you forgot to include parking requirements into your zoning analysis.
When you’re dealing with tight urban infill lots, as we discussed in our Urban Infill Development Explained article, the unexpected addition of parking to your theoretical building can have disastrous results. Often times in our earlier urban infill projects like these, we would include first floor or underground garages in order to meet parking requirements. Dedicating an entire floor to parking eats up would-be unit space, so if you aren’t honing in on this from the start of your pencil test for potential projects, you’re going to waste a lot of time.
TIP: If you’re trying to include entry-level garage parking in a tight urban infill lot, you typically need at a minimum 50 feet of lot width to meet turn radius requirements. These requirements govern how much room a car must have in order to back out of their parking space. If you don’t have enough room, it can’t qualify as a legal parking space.
Now, maybe you’ve carved out a niche other than urban infill lots and you have more room to build. That’s great, but just be aware that less densely populated areas tend to have even more stringent parking requirements, so while it might not be as drastic an oversight during your analysis as it might be in a tight urban infill project, you’re still going to be steering in the wrong direction without keeping an eye of parking regulations, regardless of where you’re building.
So How do Parking Regulations Work?
Like any zoning regulation, the parking regulations within the municipality you’re considering for development will vary by both zone and use type. The use simply refers to what type of building you’re constructing. In our case, we’re focusing on the multifamily or apartments use type, but there is a specific use type for every type of building you could construct.
Even the same use type might have very different parking regulations if they are located in different zones. This makes sense when you think about it a bit. For example, a market in a heavily-trafficked urban downtown area with public transportation options wouldn’t need as many parking spaces as a market in a less densely populated area of the same town that is only realistically accessible by car.
As you can see from this parking regulations chart, the amount of parking spaces you are required to provide for residential construction is typically a multiplier of the amount of dwelling units your property will include. For multifamily properties, the multiplier for the amount of parking you are required to provide can also vary based on the unit count.
In our chart, you are required to provide two units of parking for every dwelling unit if your building will include 10 or more units. On the other hand, if you were only building a triple-decker with three units, you would only be required to provide one parking space per dwelling unit.
Not to go too far down a rabbit hole of a topic, but you might be thinking that this doesn’t make much sense, and it doesn’t really. Larger buildings tend to have less cars per unit in reality for a variety of reasons, both lifestyle and logistical. So why would the zoning chart above penalize you with more stringent parking requirements?
Outdated or Broken Zoning Codes
The unfortunate reality of the situation is that many zoning codes are severely outdated and do not reflect the realities of today. While the zone that I pulled that chart from is particularly dense and full of multifamily buildings, the parking requirements haven’t changed in decades.
That was a time with a much lower population and more room for cars. People were less reliant on public transportation. Unfortunately, times change and due to how slow politics can move and how controversial development is in many places, we’re often in political gridlock on this issue.
We’ve permitted many projects that required special zoning relief. This entails a political process where you meet with the neighborhood and revise your design in order to meet their concerns, or else your project will be rejected. Parking is almost universally a deep concern, especially from older long-time residents.
You can’t really blame them in a certain sense, as they want to maximize off-street parking in order to preserve the same conditions they’ve enjoyed for years. Unfortunately, this leads to oversized parking requirements that aren’t really in line with our current culture or understanding of how to develop in an environmentally-friendly manner.
Transit-Oriented Development Solves the Problem
More active municipalities have already amended their zoning codes to reflect the decreased need for parking in areas that have direct access to public transportation and amenities. These are transit-oriented areas, which are usually defined as being located around a half mile or less from public transportation options.
These are great ways to promote more environmentally friendly development and encourage more sensible urban planning. One concern you might have if you embark on a transit-oriented development journey is how the lack of parking might affect the desirability of your units when you go to rent or sell. I know, we’re now swinging in the opposite direction. It’s a balancing act.
We’ve found great results with reduced parking in our developments. Buyers targeting transit-oriented areas genuinely do tend to use public transportation and many have no need for a parking space. Even in areas where there is extremely minimal or no parking required, we like to still include some. You can then rent the spaces for additional income, or sell them separately from the units if this is a condominium project. That way you can still provide some parking to those who want it while generating additional income for doing so.
TIP: Car stacker lift systems are expensive, but may help you squeeze in enough parking to make a home-run project permittable. You’ll need special permission and inspections in many municipalities to get approval for these as a solution, but they are becoming increasingly common.
Parking shouldn’t be an afterthought when you’re conducting your initial analysis of a new development project. Keeping parking requirements in mind from the beginning will allow you to model your projects more accurately. It’s also a good idea to get started considering the role parking should play in your developments. Are you targeting transit oriented areas that might be able to withstand the loss of some parking?
Like anything, it costs money to build parking, especially if it’s garage parking. Even if you’re not spending as much as you might be on the living space of the building, you need to budget properly for constructing parking. You should be sure you are getting a proper return on those dollars spent.
If you’re in an transit-oriented area with relaxed requirements where parking won’t drive much of a premium to your rental or sales income, then you might not need much parking. If you’re in an area where people are heavily reliant on cars in their daily life, then you might want to include additional parking. It’s all a matter of the demand in the market and the regulations of the municipality.