Over the past year, the Urban Land Institute has published reports, Urban Land articles, and a database that demonstrate how developers, planners, and others are making the most of opportunities posed by a changing transportation landscape.
City policies are reducing or eliminating parking minimums, developers are recognizing the increased profitability of projects with limited car parking, and micromobility (specifically, scooters and e-bikes) is prompting new types of amenities—all creating new possibilities for the real estate industry. At the same time, the pandemic has changed how people get to and from destinations and think about previously underused spaces. And mitigating climate change and promoting health—two real estate priorities that intersect with transportation—continue to grow in urgency.
These many changes have required industry actors to adapt, and they have come with silver linings. As ULI looks ahead to another year of change in the transportation sector—spurred by the infrastructure bill, growth of electric vehicles, and potential for autonomous vehicles—real estate must continue to seek out opportunities to leverage parking policies and new mobility innovations to support successful development.
New Possibilities for the Industry
A new interactive database, Parking Policy Innovations in the United States, showcases recent parking policy reforms that aim to manage the existing parking supply, reduce traffic, cut pollution, and bolster city finances. For nearly a century, cities across the United States and beyond have required new developments to provide a set number of off-street parking spots. But research has shown that these requirements can lead to an oversupply of parking. ULI’s searchable, filterable database allows users to access information on more than 50 policies from cities across the United States, complemented by five short fact sheets that detail various types of reforms and associated implications for real estate, housing affordability, social equity, livability, and city finances.
Parking policy reforms that are highlighted in the database include (a) eliminating minimum parking requirements for development projects, (b) enabling developments and businesses to share parking facilities, and (c) using technology solutions to efficiently manage the supply of on-street parking. These types of reforms have been shown to reduce traffic and associated emissions. They can also free up resources for cities to invest in transit and other infrastructure and can lead to lower real estate development costs—meaning more profitable projects and opportunities to support housing affordability. This latter result is especially significant since providing required parking—which may be in excess of need—can be the single more expensive budget item in a project’s pro forma.
The growth of micromobility has also opened up new possibilities for real estate. The spring edition of Urban Land included a back-page feature that profiled Hubbard Street Group, which worked with Spin to provide on-site scooter charging stations as a creative, fun, and valuable amenity in one of its residential Chicago properties. Supporting micromobility options by providing charging stations, locker rooms, and dropoff zones to safely lock and store these vehicles also has benefits beyond amenity value. This infrastructure makes micromobility more accessible and reliable, improving first-mile/last-mile connections to transit, enabling tenants to reach destinations just out of walking distance without a car, and expanding the radius of transit-oriented developments. Real estate professionals are increasingly recognizing these benefits, and additional ones are described in Small Vehicles, Big Impact: Micromobility’s Value for Cities and Real Estate.
COVID-19 Pandemic, Transportation, and Real Estate
The COVID-19 pandemic has had wide-ranging implications for the transportation sector, which, in turn, has affected real estate—on top of the already-extensive impacts the industry is facing. However, real estate professionals quickly adapted to this new environment, seeing the value in nontraditional outdoor spaces and alternative modes of transportation.
Featuring over 30 innovative public space programs and projects since COVID-19 public health measures began in spring 2020, The Pandemic and the Public Realm showcases how temporary, flexible, equitable, and iterative projects can be more responsive to quickly changing needs while building support for future projects in the recovery. Many building owners converted parking spaces—from individual storefront spots to entire lots—to “streateries” or other innovative uses. These previously underused spaces are not only necessary as safe, outdoor options during the pandemic but also valuable as enjoyable features for the future, attracting customers while contributing to the public realm.
Similarly, micromobility is a naturally socially distanced, outdoor mode of transportation and was seen as particularly appealing during the peaks of the pandemic. The Urban Land article “Amid Transit Uncertainty, Micromobility Helps Properties Remain Accessible” describes how perceptions of viral transmission on public transit, transit funding cuts, and concerns about transit reliability converged during the pandemic. As developments are increasingly built with limited car parking, building owners are looking for different ways to encourage tenants to return to the office, acknowledging that some are reluctant to use their former commuting options. By providing on-site charging stations and docks, tenants can be confident that they will have reliable micromobility options at their workplace for their commute.
Real Estate ESG Priorities
Tackling climate change and promoting health continue to be important components of environmental, social, and governance (ESG) strategies, and the climate crisis and COVID-19 pandemic have increased the urgency of these priorities for real estate. Because fossil fuel emissions from cars contribute to both climate change and low air quality, the real estate industry’s support of alternative modes has the potential to help foster a healthier and more sustainable urban environment. Policies that enable developers to build fewer parking spaces—especially within a short distance of public transit—and micromobility both provide opportunities for encouraging reduced car use.
Moreover, impermeable surfaces like asphalt can exacerbate flooding and the urban heat island effect. As climate change intensifies storms and extreme heat, building fewer parking spaces—and making more efficient use of existing spaces—can improve climate resilience.
Real estate leaders on ESG have many motivations, such as meeting tenant demand and gaining a competitive edge, but a sustainable and healthier environment is also more conducive to development. As real estate professionals continue to shape the cities in which they work, innovative parking policies and micromobility can contribute not only to better developments but also to better places.
What’s Next?
Transportation has been changing rapidly, and it will likely continue to do so. The past year has shown how the real estate industry has innovated in response, seeking out new possibilities, remaining flexible during the pandemic, and strengthening priorities. The year 2022 may bring new changes and challenges, but the real estate industry is well positioned to continue finding opportunities in what the next year presents.
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