A parking lot is worth more or less depending on the income it produces. Dividing that value by the number of spaces gives a value per parking space, which helps you compare lots of different sizes, check an asking price, or decide what a single space might sell for.
Use the calculator below to estimate the value of each space using the income approach.
Key Takeaways
- Formula: Value per Space = Annual Net Income ÷ Cap Rate ÷ Number of Spaces.
- Net income first: Annual Net Income = (Monthly Revenue − Monthly Operating Expenses) × 12, before debt payments and income taxes.
- Cap rate matters: A lower cap rate gives a higher value; a higher cap rate gives a lower value.
- Check the price: Dividing an asking price by spaces and finding its implied cap rate shows how it compares with your estimate.
- One method of several: Compare the result with recent sales of similar parking and the land's value.
Calculate the Value of Each Parking Space
Enter the lot's income, number of spaces, and a market cap rate to estimate the value per space.
Net Income / Year
$0
Net Income / Space / Year
$0
Value Per Space
$0
Total Lot Value
$0
Asking Price / Space
-
Implied Cap Rate at Asking
-
How to Value a Parking Space
The income approach values a lot by dividing its net operating income by a cap rate, then spreads that value across its spaces:
Value per Space = (Annual Net Income ÷ Cap Rate) ÷ Number of Spaces
- Annual Net Income: Yearly revenue minus operating expenses such as taxes, insurance, maintenance, staffing, and fees. It excludes loan payments and income taxes.
- Cap Rate: The market rate of return used to convert income into value. Use rates from comparable sales in your area.
- Total Lot Value: Annual net income divided by the cap rate.
- Number of Spaces: The usable spaces the value is divided across.
- Implied Cap Rate: Annual net income divided by an asking price, which shows the return the price implies.
Worked Example
Say a 100-space lot earns $18,000 a month with $7,000 in operating expenses, so net income is $11,000 a month, or $132,000 a year, which is $1,320 per space per year. At an 8% cap rate:
$132,000 ÷ 0.08 = $1,650,000 lot value, or $16,500 per space
The cap rate has a large effect. The same income gives $22,000 per space at a 6% cap rate and $13,200 per space at 10%. If the lot is listed at $1,800,000, that is $18,000 per space, about 9.1% above the income-based value, with an implied cap rate of 7.33%. Enter your own numbers above.
What Affects the Value of a Parking Space?
- Net income per space: Higher rates, occupancy, and turnover raise the income each space earns and its value.
- Location and demand: Spaces near downtowns, transit, hospitals, airports, and venues tend to hold more value.
- Cap rates: Market conditions, interest rates, and perceived risk move cap rates and therefore values.
- Lease and contract terms: Long-term, stable income usually supports a higher value than volatile income.
- Land and redevelopment potential: Zoning and future development can add value beyond parking income.
- Condition and layout: Paving, drainage, lighting, and efficient layout affect costs and how many spaces fit.
Frequently Asked Questions
How do you calculate the value of a parking space?
Divide the space's annual net operating income by a market cap rate. Divide the lot's total net income by the cap rate to get its value, then divide by the number of spaces. For example, $132,000 of net income at an 8% cap rate is a $1,650,000 lot, or $16,500 per space across 100 spaces.
What is a parking space worth?
There is no single figure. Value depends on how much net income the space earns, local cap rates, location, and demand. Two spaces in the same lot can be worth about the same, while spaces in different markets can differ many times over. Compare your result with recent sales of similar parking.
How does cap rate affect the value of a parking space?
Cap rate and value move in opposite directions. In the example, the same $132,000 of net income gives $22,000 per space at a 6% cap rate and $13,200 per space at a 10% cap rate. Lower cap rates reflect lower perceived risk or higher demand.
What other methods are used to value parking?
Besides the income approach used here, appraisers use sales comparison, which looks at recent sales of similar lots or spaces, and cost or land value approaches, which consider land value and the cost to rebuild. Lots with redevelopment potential can be worth more than their parking income alone suggests.
Can I use this for a single parking space, such as a garage or condo space?
Yes. Enter the monthly revenue and expenses for that one space and set total spaces to 1. Individually sold spaces often trade based on local scarcity and demand, so also check recent sales of comparable spaces in the same building or area.