In virtually every American city, a developer who wants to build an apartment building must first answer a question that has nothing to do with how many people need homes: How many cars will your tenants park? Local zoning codes specify minimum parking ratios — typically one to two spaces per dwelling unit — that must be included in any new residential development, regardless of whether residents own cars, whether transit is nearby, or whether land is too valuable to be paved over. These mandates are not neutral administrative rules. They are a government-imposed subsidy for automobile storage, financed entirely by the people who need housing most.
The $40,000 Space Nobody Asked For
Concrete and steel are expensive. According to NAIOP, the Commercial Real Estate Development Association, structured parking in the United States costs approximately $30,000 to $40,000 per space nationally. In dense urban markets where land is scarce and construction is complex, that figure climbs significantly higher: Denver's Community Planning and Development office puts the cost of structured parking at up to $50,000 per space. Underground garages in high-cost coastal cities routinely exceed that figure.
Developers do not absorb these costs. They cannot. The economics of multifamily development leave no room for charitable car storage. Every dollar spent building a mandated parking space is a dollar embedded in the monthly rent or purchase price of every unit in the building. A 100-unit apartment building required to include 150 parking spaces at $40,000 each carries $6 million in parking infrastructure before a single foundation is poured. That burden is distributed across every resident — including the substantial share of urban renters who, according to Census Bureau American Community Survey data on vehicle availability, do not own a car and derive no benefit from the space they are forced to subsidize.
This is precisely the kind of distortion that Milton Friedman identified throughout his career: a government mandate that bundles an unwanted good with a necessary one, raising prices for everyone while benefiting a subset of users at the expense of the whole. When markets are allowed to function, developers build parking where tenants demand it and price it separately — as is done with any other amenity. When government mandates it, the market signal disappears and the cost becomes invisible, buried in rent.
Land Is Not Unlimited
Beyond direct construction expense, parking minimums impose an opportunity cost that may be even larger: the land itself. Every square foot dedicated to a surface parking lot or a parking deck podium is a square foot that cannot become a home. In high-demand urban neighborhoods — precisely the areas where housing pressure is most acute — this trade-off is starkest. A single-story surface lot on a standard urban parcel could accommodate dozens of apartments. Instead, by regulatory mandate, it stores cars.
Research from NYU's Furman Center offers a revealing data point on how binding these constraints actually are. A Furman Center study of parking requirements in New York City found that developers consistently build only the bare minimum number of parking spaces required by zoning law — not one space more. This is not coincidence. It is the behavior of rational actors operating under a cost constraint: if the market wanted more parking, developers would supply it voluntarily without a mandate. The fact that they build only what is required proves that minimum parking requirements are a binding, distorting force — not a codification of market demand.
Friedrich Hayek's concept of the knowledge problem applies with particular force here. No city planner sitting in a planning commission can know the optimal ratio of parking to apartments for each neighborhood, each building, each tenant profile. That knowledge is dispersed across thousands of individual decisions — developers surveying their markets, tenants choosing buildings, landlords pricing amenities. Parking minimums override this decentralized discovery process and substitute a single mandated ratio for the entire city, at every location, for every use. The predictable result is systematic over-production of parking in transit-accessible neighborhoods and a corresponding under-production of housing.
Minneapolis: A Natural Experiment
In 2019, Minneapolis eliminated mandatory minimum parking requirements citywide as part of its Minneapolis 2040 comprehensive plan, the most ambitious zoning reform in the city's history. The plan also legalized duplexes and triplexes on all residential land. The results since then constitute one of the most instructive natural experiments in contemporary housing policy.
While national rents climbed roughly 22% between 2019 and 2024, rents in Minneapolis declined approximately 4% over the same period — a swing of more than 25 percentage points relative to the national trend. Minneapolis did not benefit from population decline or economic contraction; it maintained steady growth throughout. The divergence reflects the fundamental economics of supply: when you remove barriers to construction, builders respond, supply increases, and prices moderate. Parking reform was one component of a broader liberalization, but its contribution to unlocking development on constrained urban parcels was significant.
More than 3,700 cities across 22 countries have now enacted some form of parking minimum reform, according to the Parking Reform Network — including more than 100 that have eliminated minimums entirely. This is not a fringe experiment. It is an emerging consensus, driven by the observable economics of housing costs.
Who Bears the Cost
Thomas Sowell's most persistent analytical framework asks a deceptively simple question: And then what? Parking minimums exist because city councils respond to the loud and well-organized constituency of existing residents who drive and demand free or subsidized parking. The cost of that political accommodation is borne by people who do not yet live in the city — would-be residents priced out of housing that was never built because the economics of mandatory parking made it infeasible.
A 2025 study by researchers at the University of Denver and the Terner Center for Housing Innovation, examining the effects of parking requirement elimination in Denver, found that removing minimums led to measurably more multifamily housing construction — particularly in transit-accessible corridors where land costs are highest and the parking burden most severe. The study also found that the additional units were more likely to be affordable without subsidy, because the removal of mandated costs lowered the breakeven rent required to make projects financially viable.
The reform is straightforward. Cities should eliminate parking minimums in all areas within a reasonable distance of transit and allow the market to determine parking supply based on actual demand. Developers who believe their tenants want parking will include it and will price it separately — giving car-free renters the ability to opt out of a cost they do not need. This is not a radical proposal. It is the application of a basic market principle: goods should be priced by supply and demand, not mandated by planning codes written in the 1950s for a world that no longer exists.
The housing crisis has many authors: the Federal Reserve's monetary expansion, single-family zoning, regulatory permitting delays. But mandatory parking minimums deserve a prominent place in that catalog. They are a government mandate that increases construction costs, reduces housing supply, and forces car-free renters to subsidize car-owning neighbors — while making it harder to build the urban density that both the market and the data consistently show Americans need.
