Have you ever seen a flat parking lot in the downtown of a US city?

Low property tax (because it's unimproved) plus real estate speculation.

You might be surprised just how profitable those parking lots can be.

Putting in a 10 to 25+ million dollar multiple level parking garage can pay off, but only if there is enough demand for it and you can get zoning permission.

We aren’t talking multi-level though we are talking about an actual flat parking lot in the middle of a downtown core which is what speculators do and have done in my city while they wait to sell expensive land.

To be more clear. Depending on the location, those flat parking lots can be pulling in 1+ million per year in profit.

That doesn’t mean building a multi level parking garage in that same space is actually a good investment because demand isn’t unlimited. What you see as wasted space can therefore actually be a highly efficient business.

And if you built even a conservative 5 story building, it would generate significantly more value.

Value possibly, profit not necessarily.

Put another way if building a 5 story building would be obviously more profitable then they would do that but the opportunity costs is now 1+ million per year you aren’t getting from the parking business.

Not clear. Plenty of people will forgo selling land to a developer who wants to build a five story building in order to wait for the premium that comes from the developer who wants to build a 50 story building.

The business has maybe 30 spaces at $20/day. If we assume some people use hourly rates but most use daily lets say each parking space makes $25/day for $750/day. That works out to $273,750 before expenses. To get $1 million you’d need over 100 spaces which is quite a massive plot of land for the downtown core of a city.

~115 parking spaces can fit on a normal 1-acre paved, marked parking lot. You can double that when cars park in long rows at the cost of having attendants.

You can unquestionably have smaller lots, but it’s hardly a massive plot of land.

1-acre is pretty massive for a plot of land in the downtown core of the city. It can fit an entire apartment complex. The sale value is extremely high so the $1 million in revenue isn’t that attractive given the cost of holding the land.

I mean there’s a reason we build buildings, that’s hardly in doubt. The point was simply that even seemingly undeveloped land in or near the urban core can be generating a respectable income stream and then after N years the land has also appreciated. This is especially appealing in the event of a presumably short term glut of residential and or commercial properties/zoning issues.

Also, an acre with parking attendants doubles the number of cars so they could be clearing close to 2 million before expenses, and attendants aren’t that expensive.

Yes it is profitable to wait for land to appreciate.

Land appreciates either way.

It’s far more profitable to charge people 20$ to use 1/300th of an acre for a few hours than to actually do nothing with it. Which means the opportunity cost to build something is higher.

Unless the building is going to clearly be wildly profitable it may be better to stick with a parking lot.

> Have you ever seen a flat parking lot in the downtown of a US city?

Houston.

Unimproved? Building a parking lot isn't cheap and it does make the land more useful.

> Building a parking lot isn't cheap

It's cheaper than an actual building...

> and it does make the land more useful.

...and less useful than one, too.

Usefulness comes in many guises. Think of a parking structure as an enzyme to catalyze transactions with people hailing from a further distance away. Without that space, the exchange can't happen.

The drive (no pun intended) here is to make that an unnecessary or at least facilitated through different means.

You want people hailing from further distances via public transit and rail, and you want the majority of the businesses in an area servicing a highly dense, local community that can all walk there within 10-15 minutes.

This enzyme must be removed, the American Urban Body reworked to reject suburban thinking like this.

Trivially cheap compared to a 10 story apartment building.

If your goal is to put up an apartment building, it's cheaper to rip up asphalt than to demolish a multi-level concrete and steel parking structure.

It is comparatively cheap and comparatively less useful

Or if you don't want your neighborhood more crowded, it's actually more useful.

nimby get out

It’s not just empty fields. It’s also empty buildings. A grocery store sized unit sat vacant in my San Francisco neighborhood for over a decade. Cheap property tax due to Prop 13. Owners wanted to wait for the “right offer” to develop it.

Many of the abandoned houses in Detroit are owned by speculators who will do nothing with it but wait for land prices to increase.

And that’s worse than them just being abandoned how? Nobody else wanted them, nearly anybody could have bought dilapidated houses in poverty stricken neighborhoods extremely cheaply.

They are still abandoned. They are instead now owned by people that have the means, but no intention of making them better.

It has been shown that LVT reduces blight: https://www.pewtrusts.org/en/research-and-analysis/blogs/sta...

> It has been shown that LVT reduces blight

Did you mean to post a different source? The one you posted doesn't "show" anything, equivocates on whether LVT actually reduces blight in the few instances where it's been practiced, and makes meaningful suggestions for solutions other than LVT that it indicates have been shown IN PRACTICE to reduce blight (e.g. a land bank).

On the other hand, many of the vacants in Philadelphia are vacant because the owner has fled because the back taxes are more than the building is worth.

Many of the houses abandoned in Detroit were abandoned (and often torched) due to the ridiculously high property taxes and lack of value returned by the city for those taxes.

It's hard to justify telling land owners to pay high property taxes when the city delivered the highest crime rates and worst performing schools in the nation in exchange for those tax dollars.

Land value tax aligns incentives better. If property values go down because the place sucks, at least your tax bill drops in line with that.

In Australia at least local government rates are based on "improved property value", i.e. you get taxed more from building a house on your land. It absolutely does lead to land-sitting even in higher density inner-city suburbs.

Taxing improvements is a proxy for progressive taxation. ie. rich should pay more. LVT is effectively a flat tax on acreage normalized by community wealth. To the broad middle class, taxing improvements "feels" more fair.

Then why not do it properly? Only levy extra taxes if the value of any building constructed on the property exceeds a certain threshold...