Is parking a
commodity? If it is then we could manage
it better, value it more and it could play a major role in revitalising a city.
The definition of
a commodity is a marketable item produced to satisfy wants or needs. The definition from Wikipedia is a class of goods for which there is demand,
but which is supplied without qualitative differentiation across a market. Or
in plain terms, a commodity is not a high value product, it is common, in
plentiful supply and almost always anyone can provide it. Parking is possibly
seen as a commodity.
As in the case of
some commodities, the price of parking is also derived from the function of the
market, that is, supply and demand in the parking market tends to set the price
for parking as one parking operator competes against another parking
operator. In a lot of cities, this rule
only applies to some classes of parking, such as off-street parking. Parking on-street is not competitive in most
places and therefore this class of parking is mis-priced and mis-managed. Parking is seen as a plain, simple, valued
but not a valuable product.
So is parking a
commodity? Mostly yes but only in a
functioning market place. In the real
world, in some cities, the market is not functioning well and so some cities have
too much or too little parking as a result.
It is common, its value is not that high, it is mostly in plentiful
supply and there are little or no restrictions to the provision of parking (you
need land in the same way you need a factory or farm in the production of other
commodities). In this form, parking is a
commodity. To get the full benefits of a
commodity though, that is the right value at the time you purchase or use it,
there must be a functioning market and this is where most cities let its constituents
down.
The problem is
that the major suppliers of parking in a modern world view parking though old
glasses. In city decision making,
parking is seen as a capital asset and not as a commodity. This devalues parking and draws valuable
resources to support the wrong activities.
Some cities spend time on major ‘parking plans’ that are all about
dealing with parking buildings and assets, but have little interest or
knowledge on how to make those assets then work efficiently. In other words, over simplistically, it is
acceptable for those assets to be poorly managed as long as they are in the
right place. For example, a car park is
built at a cost of $30m, but its impact on the surrounding retail area will
have a positive affect of $160m over its life time, that’s not counting its own
revenue or inflation. Yet the energy
expended on getting the building in the right place, how it fits in with other
parking resources and how it links into a transport network, is
disproportionate to the economic benefits created by the parking
operation. Parking is about car park
buildings as much as I-Pods are about the Chinese factory ‘building’ they are
made in. It’s important but not that
important.
So what is the
benefit of defining parking as a commodity? It’s not a pork belly or orange juice traded
out of the Chicago Mercantile Exchange.
It is the moment in time, that people consume, not the piece of turf the
car sits on. When a customer buys
parking, they don’t get a piece of tarmac, they get a start time and a finish
time. They get the ‘b’ in the ‘a to b’ relationship. When viewed properly as a commodity, it is a
marketable and competed for resource to the benefit of the consumer and
supplier. It gets the right ‘value’ attached to it. Notice here I didn’t say price, but
value. Cities have a history of
mis-valuing parking and therefore distorting the market, setting incorrect
prices and subsequently creating the wrong supply or demand volume, that is too
much parking or too little parking.
Cities have caused the wrong supply of parking because of the
mismanagement of the value of parking.
Parking should be marketed as a commodity and allow the market to solve
the issues of supply and demand, for the benefit of all. The market will allow to be built just the
right amount of car parks required.
Let’s look at
other marketable and competed for resources like a seat on a plane. A seat on a plane is priced exactly to match
its value. The internet provides many
ways to market this commodity these days in fact this is one of the most
competitive markets in the world. You
can be on a plane and all of the people surrounding you will have paid totally
different prices to be in that seat with you, just so the plane can be
filled. Price is a product of when you
purchased the ticket or what time of the day the flight is at. It has the right value. The benefit of seeing parking in the same
light as the airline industry is that they understand how to utilise the
resource. They have to draw the maximum
opportunity out of it to benefit the consumer and the owner. Having a functioning ‘market’ where parking
is competitive and variably priced, ensures just the right amount of parking
will be provided, with the right value attached, for the benefit of all.
A market functions well when the supply and demand of the commodity
are in relative balance. If it is out of
balance, the market sends signals to the price that the commodity is now more
valuable or less valuable. The affect of
this is that the suppliers or consumers then respond by buying or selling or
not buying or not selling the commodity, and therefore rebalancing the
value. Most cities don’t allow the
market to operate by interfering with supply as this is the only component they
can affect, as they can’t affect demand.
So parking is then deliberately mis-valued and mis-priced to drive the
outcomes they want. The result is
inevitably traffic jams or streets of vacant car parks, where the ‘goldilocks’
car park is required, that is just the right amount of cars for just the right
amount of car parks.
Most cities would love to reduce their reliance on parking and
mode-shift to other transport methods such as cycling or public transport. The method they use is Travel Demand
Management. This is just another tool to
interfere in the market. Colloquially,
if the public transport system is set up well with greater worth placed on
people’s time in buses than in their cars, and the road corridors are set up to
allow for greater worth for peoples time on those corridors than a private
vehicle, then far less parking would be needed, other than for community access
functions. Sadly, this is not the
case. Most cities will try to regulate the
heck out of the routes, the medium and the destination and force us into a
poorly functioning parking provision with artificial prices and over or under
supply.
In conclusion, commodities require a market to give them the correct
‘value’ at the time of the sale. The
value of the commodity usually relates to its price. Many cities interfere in the market and this
distortion creates an over or under price and supply. The consequences of that
interference is a much longer battle to get mode shifts to other transport
choices and a slower revitalisation of the city through increased traffic jams
or streets of vacant car parks, neither are good outcomes. Parking is a commodity that needs a full
blown market to benefit us all.
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