Do Park and Ride Lots Make Sense?

Park and ride lots for transit are common in the US, especially on commuter rail systems and outlying stations of rapid transit systems. Many urbanists do not like park and ride lots, seeing them as a waste of space that could be better used for housing, which would not only provide riders, but reduce car dependence and avoid the capital costs of parking. So, I thought a brief look at the economics of park and ride lots from an agency perspective might be interesting.

Suppose we have a site adjacent to a transit station. We could build a parking lot or garage, and let drivers park for free, in which case a portion of the transit fare is actually covering the cost of parking construction. We could build parking and charge enough for parking to cover the cost of parking construction, so none of the transit fare is subsidizing the parking. Finally, we could build housing, at some density – single-family houses, townhouses, podiums, or hi-rises. In that case, some of the residents would become riders, and the transit agency may be able to collect some profit on the housing.

The analysis below runs the numbers on 8 hypothetical scenarios for a 10 acre transit-adjacent site: free parking lot, $3.00 parking lot, $5.00 parking garage, $10.00 parking garage, single-family subdivision, townhouses, podium-style apartments, and hi-rise development. The assumptions are all laid out in the spreadsheet. Housing profit margin is based on what the National Association of Homebuilders reports. The equivalent zone is what the development would be per City of LA zoning. Transit fare and service cost are per LACMTA data for heavy rail.


As one might expect, free parking loses money for the agency. Since the service cost is greater than the fare, the cost of building the parking is entirely a loss. If the agency can charge a modest amount for parking, in this example $3, the surface lot turns into a little bit of a money-maker. $298k/year is not a huge amount of money, but it’s something, and this option actually performs better financially than the single-family housing or townhouse options.

Due to high capital costs, a parking garage can be either a big winner or a big loser. If the agency can charge $5 for garage parking, the result is a loss of over $8m/year, but if it can charge $10, the result is almost $4m/year in profit, by far the best option. Note, however, that this is dependent on the ability to consistently fill a nearly 1100-space parking garage at $10/day. There are some locations where this will pencil out, towards the edges of the city and some commuter rail stops. (People might pay $10 to park downtown, but then they won’t even bother to ride transit, which is sort of self-defeating from a transportation and land use policy perspective.)

All of the housing options are guaranteed to generate at least some money by virtue of the profit from selling the housing. Obviously, the podium and hi-rise options do best and beat surface parking in nearly any scenario. If you are in a neighborhood where podium or hi-rise development pencils out, you probably don’t want your transit agency to be in the business of building parking garages anyway.

One thing to note here is that the analysis is quite sensitive to the interest rate. This is because the parking options have large up-front costs, while the housing options have large up-front profits. An increase to 5% turns both garage options into big losses, with even a $10/day garage swinging from $3.8m gain to a $1.1m loss. In contrast, the financials of the housing options improve.


Lastly, please note that this is a very rudimentary analysis and does not account for benefits and impacts to other policy goals. For example, a 5445-space parking garage might be a winner for the agency, but if it’s not located close to a freeway, it may cause a lot of neighborhood congestion. Building housing creates the opportunity for more people to live in the city, while building parking only creates the opportunity to live somewhere else and drive. And of course, parking lots and garages create border vacuums and dead zones in the city fabric, which is undesirable.

Bottom line: park and ride lots may make sense in suburban and exurban areas if parking fees are enough to cover the cost of lot construction and help subsidize transit operations. Otherwise, build more housing.


11 thoughts on “Do Park and Ride Lots Make Sense?

  1. Ben Ross

    The usefulness of park-and-ride depends on the form of the city and the transit network.

    In a city with parking lots downtown that opens its first rail line, developing the downtown parking lots is a higher priority than developing around suburban stations. Since few of the people now parking downtown will be able to walk to the train station, you need park-and-ride to absorb the displaced cars.

    In a city with a denser transit network & little downtown surface parking (or the same city years later),, you want to build dense nodes on the suburban park-and-ride lots. But until you reach that point, park-and-ride at the suburban stations serves as a sort of land bank for dense development. If you build on it too early, you get insufficient density.

    1. Howard

      You’d need park and ride lots under the dense pocket of housing so that people who live away from transit can a. Use the line, or b. Visit such entertainments as can be had in the TOD village. OK charge for it though.

    2. Howard

      Another good land bank is trailer parks. They provide sort of affordable housing at lower density and they are not very desirable neighbors, so replacing them will not cause much of an outcry.

  2. Alon Levy

    There’s a crucial difference between park-and-ride lots (inc. garages) and housing: park-and-ride lots tend to only generate peak-direction rush hour transit ridership, whereas dense housing tends to generate less peaky transit ridership. This is because people living in a neighborhood cluster on top of a train station may give up their car altogether, and use transit for errand trips, provided the frequency is good enough. The neighborhood would also have some commercial uses, like a supermarket, and these may generate trips to the station and not just from it.

  3. maxutility

    It would seem that the point that building housing by the station will generate ridership is, while true, fairly insignificant. Even compared to a high-rise, I would assume any parking structure will hold something like 5+ times the units as a housing structure. Especially when the housing will have some parking requirement built in. And virtually every spot will be a transit rider while only a small percentage of the housing will be.

    The larger issues seems to me to be the opportunity cost of leaving valuable space as parking and the effect that embedding a transit stop in a parking desert does to the surrounding neighborhood and its long term effect on the transit itself. Traditional park and ride lots on commuter rail may make economic and planning sense when they are serving non-dense areas where there is a realistic expectation that the transit stop will draw riders from a large catch area that is not well served by other transit options. I.e. the classic suburban park and ride. Land value and planning in these areas mean you probably can’t build any large housing development that would be heavily transit focused anyway.

    The opposite of course is the odd desire to include parking, especially free parking at urban transit stop in middle density neighborhoods in the urban center. Los Angeles’ Metro has taken a lot of criticism for doing this repeatedly over the years including on recent rail construction. These are not suburban commuter lines but light rail in well developed, dense urban areas with massive land values. They have begun to ameliorate the loss here by experimenting with variable pricing for the parking and they does seem to be more thought going in to developing properties around new stations to maximize housing and mixed use that will make the station area more useful long term. But there continue to be investments in building and maintaining free surface parking lots in areas with massive land values and housing shortages. I can’t tell if there is the intention to bank this land for future, better use or if the thinking is more that providing parking is an important PR move to get broader support for the political initiatives that are funding most of the new transit development.

  4. Richard

    It really depends on the nature of the station and what is around it. Obviously there are some stations near highways/industrial uses that are not very desirable as housing.
    Housing also is a permanent solution, you cant rethink it 5-15 years down the line. A parking lot or garage is not permanent, in a few years or a decade the land can be redeveloped; depending on the initial cost of the garage.

  5. crzwdjk

    I think this analysis is accurate but it’s not quite telling you the full story. The highest ridership density comes from office buildings, because offices manage to cram in a whole lot more workers per square foot than residential buildings have residents. And because there are a lot more commuters in an office building, the marginal benefit of being closer to the train station is much larger. Indeed, with residential, to some extent there’s actually a disbenefit to being right on top of the station (noise and crowds) while that’s not nearly as much of an issue for commercial tenants. So what all this is really saying is that it might actually make sense to have parking lots in the immediate area around a station until that area can be developed into offices and maybe taller residential buildings.

    1. maxutility

      I think this is generally true when you’re talking about greenfield development. If the station is the first “thing” in the immediate area, it might make sense to wait until other activities start to develop in the area and then develop the lots once demand for office/retail/housing is higher.

      I think the problem comes in stations placed in areas that are somewhat “mid-development”. So there is maybe some open land around the station, but also early residential/commercial activity. It may seem like the smart thing to land bank the parking lots until they can be developed into some large structure. But the very existence of a dead zone of parking all around the station can also drive the way the area develops. Unless you are in an area that is very land constrained otherwise, parking lots tend to drive away other uses and you get land use and road designs that make the parking more permanent rather than ripe for development. So there’s a real risk of creating the development pattern that the transit is supposed to be fighting against.

      At the very least, it’s just dumb financially for a lot of the parking to be free. If your free lot is anywhere close to full, you should be charging something for it. Offering free parking is just asking everyone (transit users and tax payers) to subsidize expensive parking for a tiny number of people.

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  7. Howard

    You’d need park and ride lots under the dense pocket of housing so that people who live away from transit can a. Use the line, or b. Visit such entertainments as can be had in the TOD village. OK charge for it though.

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