A parking ratio is a statistic that takes the number of available parking spaces, typically for an office property, and divides it by the property's entire gross leasable area (GLA). This ratio is most commonly expressed per every 1,000 square feet of property, i.e., a 20,000-square-foot office building with 100 parking spaces would have a parking ratio of five spaces per 1,000 square feet. Cities often have commercial zoning ordinances that set minimum parking ratios, which may vary based on property type; for example, retail projects may require a higher parking ratio than industrial developments.

Research suggests that office building tenants are asking for more parking — and many developers are responding by adding more parking spaces to their current developments, increasing their parking ratios. While the most common office building parking ratio is currently around 4 spots per 1,000 square feet, many tenants have been asking for ratios of 5 or 6. Though adding parking spots can be expensive — $2,000 to $6,000 per space for surface lots, $12,000 to $25,000 for garages — developers are often seeing this as an investment that may be able to improve the long-term occupancy of their projects.

Parking ratio, a common term in commercial real estate, is a statistic used to indicate how much parking is available for a commercial or multifamily property. The ideal parking ratio differs by asset type — and is also dependent on a plethora of other factors, including location, tenant types, and the goals of the developers of the project.

Much of the time, local regulators like planning or zoning commissions may establish parking ratio minimums for properties in densely populated areas — though developers are often able to apply for a variance to accommodate parking plans that don’t strictly adhere to these requirements. That said, the required minimum property ratios generally vary based on property type. A hospital, for example, may have a higher required parking ratio than, say, a commercial retail property.

It isn’t at all uncommon for newer, Class A commercial properties to have higher parking ratios than older developments. Developers generally place great importance on an asset’s parking ratio as a means of staying competitive with similar properties in the market. In regards to apartment and multifamily finance, parking ratios are critical — parking areas for apartment properties often factor into fees a tenant is expected to pay. As a result, a higher parking ratio generally means that a property can generate more revenue outside of rental income.

The average parking ratio for commercial real estate varies depending on the type of property. According to Commercial Real Estate Loans, the most common office building parking ratio is currently around 4 spots per 1,000 square feet, though many tenants have been asking for ratios of 5 or 6. For retail projects, the parking ratio may be higher than industrial developments. According to Apartment Loans, the ideal parking ratio differs by asset type and is also dependent on a plethora of other factors, including location, tenant types, and the goals of the developers of the project.

In most cases, the higher a building's parking ratio, the more desirable it will be for potential tenants. Higher parking ratios can lead to higher common area maintenance fees (CAM), since office building tenants usually pay rent on their portion of a building's common areas, which often include parking spaces. Additionally, research suggests that office building tenants are asking for more parking — and many developers are responding by adding more parking spaces to their current developments, increasing their parking ratios. This can be an investment that may be able to improve the long-term occupancy of their projects. In regards to apartment and multifamily finance, parking ratios are critical — parking areas for apartment properties often factor into fees a tenant is expected to pay. As a result, a higher parking ratio generally means that a property can generate more revenue outside of rental income.

The drawbacks of a low parking ratio in commercial real estate are that it can make a property less desirable to potential tenants, and can lead to lower common area maintenance fees (CAM). According to Commercial Real Estate Loans, in most cases, the higher a building's parking ratio, the more desirable it will be for potential tenants. Lower parking ratios can also lead to lower CAM fees, since office building tenants usually pay rent on their portion of a building's common areas, which often include parking spaces.

In addition, according to Apartment Loans, parking areas for apartment properties often factor into fees a tenant is expected to pay. As a result, a higher parking ratio generally means that a property can generate more revenue outside of rental income.

To calculate the parking ratio for a commercial real estate property, take the number of available parking spaces and divide it by the property's gross leasable area (GLA). This ratio is usually expressed per every 1,000 square feet of property. For example, a 20,000-square-foot office building with 100 parking spaces would have a parking ratio of five spaces per 1,000 square feet.

The calculation is relatively simple: Number of Parking Spaces ÷ Square Footage of Property = Parking Ratio.

You can find more information about parking ratios in commercial real estate here, here, and here.