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Marketplace

The tricky practice of pricing parking

Tracey Samuelson Mar 13, 2015
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On a freezing cold day, Zhan Guo stood on a Manhattan street corner. Every available parking space on the surrounding blocks was taken. Turning to the cars driving past, Guo estimated one out of every three was circling the blocks, looking for a place to park.

“Why are they searching? Because [street-parking rates] are too cheap,” Guo says.

Guo researches parking at the Wagner School of Public Policy at New York University, and says studies show that on average, one-third of cars in a downtown area at any given time are looking for parking.

Metered parking in much of Manhattan costs $3.50 an hour, while other blocks require only that cars be moved for twice-weekly street cleaning. That means many people would rather search for street parking than pay for a private garage.

“If you’re a reasonable person, you’re willing to spend maybe thirty minutes searching around, instead of $20 right now into a garage,” he says.

Tell someone the price of their parking meter is too cheap and most people will probably disagree, probably pretty strongly, says Rachel Weinberger with NelsonNygaard Consulting Associates.

Weinberger says the average meter rate nationwide is $1.15. Accounting for inflation, that’s actually roughly about on par with the country’s first meters.

“The first parking meters were installed in the ’30s, really at the behest of a merchant who felt like his employees were parking in front on his store and he couldn’t get them to move,” she says. “So he petitioned the city council to put meters in on his block.”

But if the price of parking hasn’t changed much in real terms, demand for it has. Weinberger says raising prices is difficult, as the process in many cities is more political than scientific.

“We sort of lost the will to change the prices,” she says. “It’s particularly humorous to me that someone might be going out to dinner for say $200, and yet they’re loathe to pay $6, let’s say it’s two hours, on top of your $200 dinner bill.”

However, in recent years, some cities, like Seattle, Pasadena and San Francisco have started to use systems that do try to take demand into account when setting the price of parking.

“So every six or eight weeks we adjust the rates up or down by 25 cents an hour or 50 cents an hour,” says Lauren Mattern, the manager of parking policy and technology at the San Francisco Municipal Transportation Agency.

San Francisco recently finished a pilot program to test its new pricing strategy. The city nudges the rates up or down until sensors in the parking spots indicate that at any given time, there’s about one open space per block. Rates were also adjusted based on the day of the week or time of day.

“Then there is a ceiling and a floor to that, so we can go as low as 25 cents an hour or as high as $6 an hour,” she says. 

In one neighborhood, she says that meant increasing rates on a busy street, and dropping them on a nearby quieter one.

“Basically by adjusting rates, we’re able to draw some of the demand away from the busier street and give people a bargain for parking on the less popular street,” she explains. “So you’re able to price shop for parking in that neighborhood for the first time.”

Mattern says on the whole, the average price of parking in the pilot neighborhoods actually dropped, and no more circling, looking for a spot.

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