|Parking Spots Worth $560K? Most Expensive Cities for Parking|
|By SUSANNA KIM (@skimm)||Jun 15, 2013, 8:48 AM|
While recent headlines of parking spots going for hundreds of thousands of dollars in Boston and San Francisco shocked readers this week, the volatile price of parking, especially residential parking, reflects the "volatile" world of urban real estate, say real estate experts.
The Internal Revenue Service auctioned two residential parking spaces in Boston Thursday for $560,000, and an 8- by 12-foot parking space in San Francisco's hip South Beach neighborhood sold for $82,000 the week before, as first reported by the San Francisco Chronicle.
"When we're looking at residential parking compared with commercial, the overall trends are similar. But with residential parking, it's specific to that individual block, and it's much more variable," said James Cook, U.S. director of research at the real estate services firm Colliers International. "It's more volatile as well."
That was evident on Thursday in Boston, when a crowd of people gathered in the rain in the upscale Back Bay neighborhood. The IRS auctioned two parking spots it had seized from a man who owned almost $600,000 in back taxes. He bought the spaces for $50,000 in 1993, the Boston Globe reported. Bidding started at $42,000.
At first glance, the two parking spaces don't seem as if they could fetch half a million dollars. They are located in what looks like an alleyway, behind two other parking spaces. But those two parking spaces are behind Commonwealth Avenue, where a spot down the street sold for more than $300,000 in 2009.
The winner, Lisa Blumenthal, already has three parking spots that came with her home on Commonwealth Avenue, just a few blocks away from the Boston Marathon finish line. But she told the Boston Globe more spaces would allow guests and workers to park.
Blumenthal declined to comment to ABC News.
"It was a little more heated than I thought it would have been," Blumenthal told the Globe.
Unlike Blumenthal's new property, the parking spot on San Francisco's Townsend Street that sold for $82,000 is in an enclosed parking garage connected to a condominium near San Francisco Giant's AT&T ballpark.
When Cook saw the headlines for the parking space prices, he was shocked at first, then when he found out where the spots were located, they "made more sense."
"It's really simple economics -- the laws of supply and demand. In the U.S. the parking world, as with all real estate, is a tale of two worlds."
The two worlds Cook, who lives in rural Indiana, is referring to are the big urban areas of the country, "then the rest of the U.S."
"There's no lack of parking in the rest of this nation," Cook said. "In Indiana, I never pay for parking. It's all about supply and demand."
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"The Back Bay neighborhood is super affluent, trendy, expensive and one of the most difficult places to find a parking spot in North America," he said.
Cook said renting out the parking spot would provide a potentially stable source of income for the new owner, or she could always resell the spot.
"Either way, she'll get the value if she sells it. There's no loss of money for her," said Cook, who added that the wealthy homeowners in the area would most likely be able to afford the spots.
The median home value for Back Bay in Boston, according to the Zillow Home Value Index, is $736,300, up 17.8 percent year-over-year and up 2.3 percent from March to April 2013.
In South Beach in San Francisco, it's $931,200, up 27.8 percent year-over-year and up 1 percent month-over-month from March to April.
"These are the coolest, trendiest places to live. The overall trend is that top-tier U.S. urban markets led the real estate recovery. There's been a real bifurcation," he said.
Retail real estate leasing and sales prices in New York City and San Francisco are "astronomical," Cook said.
"You would think there was never a recession. In the rest of the U.S., there's a recovery going on," he said.
Colliers International published a list of the most expensive central business districts for parking in October. They studied dozens of commercial areas and found that New York City, Boston and San Francisco topped the list of median rates for monthly unreserved parking spaces. In other words, these are undesignated parking spaces such as parking garages without specific, designated spots.
Here's Colliers list of top 17 U.S. cities by median monthly rates:
1. New York, N.Y. - Midtown: $562
2. New York, N.Y. - Downtown $533
3. Boston, Mass.: $405
4. San Francisco, Calif.: $375
5. Philadelphia, Pa.: $313.25
6. Chicago, Ill.: $289
7. Seattle, Wash.: $285
8. Washington, D.C. $270
9. Honolulu, Hawaii: $230
10. Los Angeles, Calif.: $220.93
11. Oakland, Calif.: $195
12. Bellevue, Wash.: $195
13. Hartford, Conn.: $189.74
14. Portland, Ore.: $185
15. Denver, Colo.: $180
16. San Diego, Calif.: $175
17. Minneapolis, Minn.: $175