17 Aug Do tenants really need a car park?
Any developer will tell you it’s the single bedroom apartments, without a car space, that are the hardest to sell. Town planning rules require dedicated car parks for most units in new projects (esp non CBD) and the market place (in the form of investment buyers) demand it. But what do tenants think?
In very broad terms the cost of a car space adds $50,000 to the price of an apartment, and today that space is often in a “stacker” or via a car lift, (a stacker is a mechanical car storage system). Working on a 4% return that means the rent for an apartment with a car space vs one without is $40 per week more. RACV calculate the cost of running a small car like a VW Golf is just under $160 per week. So for someone renting an apartment, the cost of a car is actually $200 per week, or $10,000 over a year… or a deposit on an apartment of your own over 4 or 5 years!!! It’s also a lot of Uber rides or PT fares.
Town planning rules are pushing developments to the transport hubs which makes sense but they are still demanding dedicated car parking. It’s kind of mixed messages. The planning laws are saying… we want new residents in high density development to use public transport but we are happy for them to drive as well. I guess it’s PT for work and car for play but it’s a huge cost to the investors and tenants for marginal gain.
On balance tenants are still preferring a car space, but change is in the air, especially at the cheaper and smaller end of the market. Australia is 7th in the world for car ownership per capita, so following international city trends, less people will drive in the future. Picture someone living in a one bedroom unit in Fitzroy who commutes to work in the city by tram, and offer them $10,000 per year saving in rent and car cost. In time we will see more apartment owners leasing out their car space separately because the tenant market wont value it.
We haven’t touched on the environmental impact of less cars, mobile working trends, or the number of development sites that would be more viable without car parking. Like all things the market will decide. But in this case, the tenant market will push back up the supply chain of residential development projects, so the tenants and managing agents that will be the canary in the coal mine when it comes to the need for car parking.