Can This Startup Turn Your Unused Parking Space Into Cash?

How to start and grow companies.
Dec. 26 2012 10:30 AM

The End of Parking Misery

Parking Panda, the new company that wants to unlock the hidden potential of America’s millions of unused parking spaces.

Parking lot.
Huge, free parking lots are a real problem

Comstock/Thinkstock.

Parking is one of the most vexed commodities in modern American life. A nation of about 300 million citizens with 255 million registered cars has as many as 800 million parking spaces, but not enough at the right place at the right time. A family needs a place to park their car when they’re home, but that space goes empty whenever they’re at work. Workers need a place to park their car when they’re at the office, but nobody is at the office most of the time. For all this parking bounty, it often seems that there’s never anywhere to park—at least not where you want to go. The mix of massive excess capacity and chronic shortage is one of the biggest, most persistent, and least examined failures of the American economy. Fixing it is going to require better policies, but it also needs a healthy boost from the private sector. Into the breach steps Parking Panda, launched earlier this year in Baltimore and now available in many cities. It is a simple way to rent out some of those unused spaces.

The idea is basically Zipcar in reverse. Instead of going online to reserve a car, you go online to reserve a place to put a car you already own. Or maybe it’s more like an Airbnb for parking spaces.

Parking Panda is one of several startups loosely grouped together around the theme of “sharing” that rely primarily on searchable maps. Computers make it so easy to list and search things that it has become possible to rent all kinds of stuff on a smaller scale than ever before.

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Until recently, it was significantly easier to rent things that had scale. If it’s difficult to find a hotel, that creates a large incentive to make any given hotel quite large—then you can aggregate the costs of publicity and make it easier for travelers to locate you. It’s a quick step from there to aggregating the aggregations themselves. There’s sure to be a Hilton in any given city, and that Hilton has tons of rooms, so you know that if you’re going somewhere and need a hotel you’ll maybe give Hilton a call.

Much the same logic applies to Hertz or, indeed, to your typical parking lot. The idea is to accumulate enough scale as to be noticeable. But the Internet and the ability to access it on the go from a smartphone reverse this logic. If it becomes trivially easy to find things, then it makes more sense to be choosy about location. Instead of aggregating all of an area’s rental cars at a few key depots, Zipcar scatters them—maximizing the chances that one will be around near where you happen to be.

The Parking Panda method is similar. A single space in a driveway or backyard is hardly worth marketing, but if an online service can drastically simplify the discovery process, then suddenly “hidden” parking capacity can be unlocked. And it’s not just residential homes. Few companies’ parking facilities are precisely calibrated to the exact number of people who work there. With Parking Panda, a spare space or five can become a small extra revenue source.

In the short-term, that means a bit of extra money for some people, a few extra parking spaces, and a hoped-for healthy volume of 20 percent commissions for the company.

What’s interesting are the longer-term implications. If you live in a city with a decent amount of transit and walkability, the cost of parking is one of the main reasons you might want to opt out of car ownership. But if you live in a structure that already includes a parking space, then that parking cost is seemingly quite low. Services that make it easier to monetize an unused space change that dynamic by bringing the opportunity costs to light. Instead of owning a car because it is cheap to park it, you could rent your parking space instead.

More broadly, a successful company in the peer-to-peer parking space could help transform the political economy of parking. In recent years many American cities—including Parking Panda’s hometown of Baltimore—have been inspired by Donald Shoup’s masterwork The High Cost of Free Parking to roll back 1950s-vintage policies requiring all new developments to come with parking spaces and to offer demand-responsive pricing for metered curbside parking.* These are good ideas, but they lack a natural constituency. Incumbent possessors of underpriced residential parking permits, by contrast, are a powerful lobby for keeping any new cars off the curbs. They generally oppose any new development that doesn’t offer copious off-street parking.

Parking Panda, by changing the economics of parking, can also change the politics. Suddenly those who already possess off-street parking have a monetizable commodity whose value only goes up when new development lacks parking. It creates a constituency that benefits from parking scarcity. This new constituency, new policies, and new business models can help usher us out of the current parking darkness into a brave new world with fewer but better-used parking spaces.

Correction, Dec. 28. 2012: The article originally misstated the title of Donald Shoup's book as The High Price of Free Parking. (Return.)

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