Who Really Pays for a Parking Space?: Estimation of Marginal Implicit Value of Off-Street Parking Spaces for Condominiums in Central Edmonton, Canada

Many large North American cities impose minimum parking space requirements on multifamily residential developments. Concern has arisen, however, that the high cost to provide these spaces raises housing prices in such complexes. Because no well-developed, formal market for parking spaces exists, this study attempted to estimate the implicit price of aboveground or underground parking spaces for condominiums located in central Edmonton, Alberta, Canada. Through the use of two real estate data sets, this study employed the hedonic method and tested for the presence of heteroskedasticity and for spatial autocorrelation when possible. Overall, the results suggested that consumers of bundled parking spaces received a large discount on such spaces. If the retail price were increased to include additional parking spaces, the higher price would not fully reflect the cost to provide such spaces. The affordability of housing might be adversely affected nonetheless. Developers, who are likely to be burdened by some of this indirect parking subsidy, may ultimately provide less housing to the market, which will lead to a higher market-clearing price. This study provided further empirical evidence to support the argument against the imposition of minimum parking space requirements. The requirements are likely to cause an oversupply of parking at multifamily residential developments.