$45K parking space a relative bargain in Canada’s competitive parking market

$45K parking space a relative bargain in Canada’s competitive parking market

On Toronto’s Mink Mile, the high fashion-huddled stretch of Bloor Street between Avenue Road and Yonge Street, ritzy retail space leases for around $310 USD per square foot, on average.

Earlier this month, a P1 parking spot in Vancouver’s Yaletown listed for the same. At $45,000 for the title, maintenance fee and taxes on the 145-square-foot parking space, on paper, the cost looks absurd.

But in a city where spots regularly sell for anywhere from $20,000 to $120,000 – if you want a space with two stalls and a gate – paying $45,000 for a parking space is hardly worth the buzz.

To put it in perspective, four years ago a parking spot at the Four Seasons in Toronto’s Yorkville (unsurprisingly also on the Mink Mile) went for $100,000. At the time the average price for condo parking spots in Toronto hovered between $25,000 and $40,000.

Last year, it was Calgary, with a survey of surface and underground parking lots in the city’s core by commercial real estate firm Cushman and Wakefield, pegging its monthly average of $473 as the highest for a private, one car parking spot. Montreal followed behind at $344, then Toronto at $315, Edmonton at $306 and Vancouver at $302.

“A parking space is a spot market on land – it’s essentially spot pricing for the land market,” Todd Litman, founder and executive director of the Victoria Transport Policy Institute, which is an independent research organization dedicated to developing solutions to transport problems, told Yahoo Canada.

And the prices are driven by supply and demand.

“By tradition, particularly in North America, we expect most parking spaces to be subsidized, to be provided by somebody else,” says Litman adding that somewhere between 98 and 99 per cent of the time that people park away from their home, they are paying indirectly through taxes rather than directly for the parking space.

“Occasionally, there are a few situations where that rule doesn’t apply – that is in a downtown area that traditionally doesn’t have a lot of parking – that’s one of the few places where people are confronted by the cost of parking,” he says. “The few times that people pay for parking it’s those spaces that are expensive so people are shocked and think they are being ripped off.”

But the reality is, he says, paying more than $40,000 for a parking space is still kind of a bargain.

“$40,000 is just the cost of constructing that parking space – there’s no significant profit on that,” adds Litman.

The money, it seems, is in the resell.

That is, if you’re one of the lucky condo owners in Canada with a spot to spare without the usual legal hoops, says Warren Kleiner, a partner in the Toronto office of law firm Miller Thomson’s Real Estate Group.

Condo owners often sign a declaration with the Condominium Corporation that sets up some of the basic parameters – like the taxes and maintenance fees. Often these include an outline surrounding “common elements” like a parking space or terrace.

“Some will have exclusivity of parking spaces – meaning you can never sell that because it belongs to everyone and you just have the right to use it,” says Kleiner. “If it’s a unit then you can sell your parking unit but most declarations will restrict who you can sell them to like selling it to a third party that doesn’t own a unit in the building.”

The main reason, he says, is security.

“I would never suggest that a developer do that – a condo is a community and you usually want to keep some control,” explains Kleiner. “You don’t want to give people access to your building that have no connection to it.”

However, there are anomalies – like the Four Seasons and its luxurious $100,000 space or the $45,000 one in Yaletown – where owners can peddle their spots to motorists looking for a downtown home for their vehicle.

“If you’re allowed to sell your parking space you can sell it for as much as you so choose,” says Kleiner adding that in Toronto parking is becoming really expensive. “It’s not just higher demand buildings but it’s also a question of the parking availability at that building.”

As a new generation of condo buyers moves in, car shares and bike storage are replacing parking spaces.

“In downtown Toronto, you have a lot of people moving into buildings where there is no parking,” says Kleiner. “A lot of younger people aren’t even buying cars necessarily if they live in certain downtown hubs.”

It’s a far cry from the days of extra parking spaces with developers trying to get lower ratios of parking to units in buildings to beat the high cost of underground parking.

“Now the requirement is less than one parking space,” adds Kleiner.

With that scarcity in mind, $45,000 doesn’t look so absurd after all, does it?