Parking as a ‘Commodity’? Hmmm...
By Kevin Warwood
Is parking a commodity? If it is, then we could manage it better and value it more, and it could play a major role in revitalizing a city.
The definition of commodity, 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
As in the case of some commodities, the price of parking also is 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 operator competes against another. In many cities, this rule applies only to some types of parking, such as off-street. Parking on-street is not competitive in most places; therefore, this type of parking is mispriced and mismanaged.
Parking is seen as a plain, simple and 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 few 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. However, to get the full benefits of a commodity – 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, for example, 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 buildings and assets, but have little interest in or knowledge of how to make those assets then work efficiently.
In other words, and over-simplistically, it is acceptable for those assets to be poorly managed as long as they are in the right place.
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. When viewed properly as a commodity, parking 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 misvaluing parking and therefore distorting
the market, setting incorrect prices and subsequently creating the wrong supply or demand volume – that is, too much or too little parking.
Cities have caused the wrong supply of parking because of mismanagement of the value of parking. Parking should be marketed as a commodity, allowing 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 carparks required.
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 out of balance, the market sends signals to the price that the commodity is now more valuable or less valuable. The effect 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 misvalued and mispriced to drive the outcomes they want. The result, inevitably, is traffic jams or streets of vacant carparks, where the “goldilocks” car park is required – that is, just the right amount of cars for just the right amount of carparks.
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. But 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 people’s time on those corridors than in 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.
Commodities require a market to give them the correct “value” at the time of the sale. The value 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 revitalization of the city through increased traffic jams or streets of vacant carparks; neither are good outcomes.
Parking is a commodity that needs a full-blown market to benefit us all.
New Zealand-based Parking Operations Designer Kevin Warwood is Director of the Parking Nation Exhibition 2014 (pnx14), May 27-29 in Christchurch. He also blogs at parkingithere.blogspot.com. Contact him at firstname.lastname@example.org.
Article Abstract from April, 2014