Why Excess Parking Is One of the Most Overlooked Income Sources in Commercial Real Estate
Many commercial properties were built under parking requirements that no longer reflect how buildings are used today.
Retail centers, office buildings, and standalone commercial sites were often required to provide significantly more parking than the tenant ultimately needs.
As a result, thousands of parcels across cities like Phoenix contain large areas of parking that are rarely used to their full capacity.
For property owners, this creates an opportunity.
The land supporting the building — particularly the parking area — may be capable of producing additional income without altering the primary use of the property.
Why Excess Parking Exists
Most parking requirements were written decades ago.
Cities often required:
• 1 parking space per 200–300 square feet of retail
• 1 space per employee for office uses
• additional buffers for peak demand
• 1 space per employee for office uses
• additional buffers for peak demand
However, real-world usage has changed.
Many buildings today operate with 30–50% unused parking capacity during normal operations.
This creates underutilized land that often sits idle for years.
Examples of Parking-Based Income
Depending on zoning and site configuration, excess parking areas can support several types of secondary income.
Examples include:
• EV charging operator leases
• Solar canopy ground leases
• Overflow parking agreements with nearby businesses
• Short-term event or contractor parking
• Solar canopy ground leases
• Overflow parking agreements with nearby businesses
• Short-term event or contractor parking
These agreements typically operate alongside the existing tenant and do not require structural redevelopment.
How Additional Parking Income Impacts Property Value
Even modest income from unused parking can materially impact property valuation.
For example:
An additional $40,000 per year in structured parking-related income may increase a property’s value by $500,000 or more, depending on cap rates and buyer underwriting assumptions.
Because the additional income comes from land that is already owned, these opportunities can often be implemented with minimal capital investment.
Evaluating Whether a Property Has Excess Parking
The key factors are not just the number of spaces.
Parcel configuration matters.
Important considerations include:
• parking-to-building ratio
• frontage exposure
• circulation and access points
• tenant operating patterns
• zoning allowances
• frontage exposure
• circulation and access points
• tenant operating patterns
• zoning allowances
In some cases, the opportunity may be obvious. In others, it requires a closer look at how the parcel is actually used.
Final Thought
In many commercial assets, the building receives most of the attention.
But the land supporting the building often holds additional potential.
Evaluating whether parking areas can support additional income is one of the simplest ways property owners can increase yield without acquiring additional real estate.