The opportunity cost of parking requirements: Would Silicon Valley be richer if its parking requirements were lower?

Abstract

We estimate the off-street parking supply of the seven most economically productive cities in Santa Clara County, California, better known as Silicon Valley. Using assessor data, municipal zoning data, and visual inspection of aerial imagery, we estimate that about 13 percent of the land area in these cities is devoted to parking, and that more than half of the average commercial parcel is parking space. This latter fact suggests that minimum parking requirements, if binding, depress Silicon Valley’s commercial and industrial densities, and thus its economic output. In an exploratory empirical exercise, we simulate a reduction in parking requirements from the year 2000 forward and show that under conservative assumptions the region could have added space for nearly 13,000 jobs, equivalent to a 37 percent increase over the actual job growth that occurred during that time. These additional jobs would be disproportionately located in the region’s highest-wage zip codes and could add more than $1 billion in payroll annually, further implying a large productivity gain.