Providing for free parking can be expensive for urban residential developers. The cost is ultimately passed along to residents in the form of higher rents or for-sale prices.

In recent years, more cities have reduced or eliminated parking minimums near public transit as they seek solutions to make housing more affordable.

On June 16, Chicago became one of the largest U.S. cities to end mandatory parking requirements for new developments near public transit. The City Council’s decision removes a longstanding barrier for residential and commercial projects in transit-served corridors, allowing builders to forgo costly off-street parking spaces and focus on creating walkable, transit-friendly neighborhoods.

This ordinance would give developers the ability to add housing in desirable, transit-rich neighborhoods like mine (Lincoln Park) without being constrained by outdated parking requirements, reducing the cost of building and making rents cheaper as a result,” LyLena Estabine, a policy researcher with the Illinois Policy Institute, said in written testimony before the ordinance was passed.

The Cost of Free Parking

For those building or buying new homes, the elimination of parking mandates is more than a bureaucratic tweak. In Chicago, the average cost per space to build an underground parking garage is $67,500, according to a city report on the reform.

The city cites research from the Center for Neighborhood Technology, which finds that a typical multifamily building’s parking garage was only two-thirds full at night.

Urban planners set minimum parking requirements for every land use. Still, the requirements often seem pulled out of thin air or based on studies that are poorly conceived and limited,” UCLA urban planning professor Donald Shoup, who died in February, notes in his 2005 book “The High Cost of Free Parking.”

Shoup’s work plays a big role in persuading cities to reduce or eliminate parking minimums as a strategy to lower construction costs for urban housing near transit.

Moving Away from Parking Mandates

Minneapolis, influenced by Shoup’s work, began eliminating parking requirements in 2015 and fully implemented this change along transit corridors by 2021. Boston followed suit in 2021, but only for residential developments where at least 60% of the units serve households earning 100% of the area median income.

In 2023, California became the first state to implement this policy statewide, with Colorado following suit last year for new housing developments near transit.

Shifting into this year, Montana passed parking reform in April, building on its 2023 legislation aimed at lowering housing costs that surged during the COVID-19 pandemic, by requiring cities with a population of 5,000 or more to permit duplexes on single-family-zoned lots.

Washington state followed with a comprehensive parking reform law in May, accompanied by a law that mandates cities allow residential development within transit station areas at moderate to high density. The goal is to create walkable neighborhoods where a car isn’t required.

The roster of cities enacting broad parking reforms is expected to grow as more cities look to lower construction costs for new housing.

Lifting the one-size-fits-all parking mandates ubiquitous in most city code books today can give businesses, homebuilders, and property owners the flexibility to have the parking they need without wasteful, costly overbuilding,” Anna Fahey, principal director of strategy at the nonpartisan policy think tank Sightline Institute, wrote.

The key to earning more parking reform may lie in how the message is communicated, as seen in Chicago.

Without mandatory parking minimums, developers of both rental and for-sale housing can reduce project costs, design more units, and better align offerings with actual market demand