Some argue that parking is the defining physical feature of the postwar American city. That may sound like a bold claim, but the numbers make a compelling case. There are an estimated 800 million to 2 billion parking stalls in the United States, amounting to somewhere between three and eight spaces for every registered vehicle. Perhaps most striking of all, surface parking lots alone occupy more than 5% of all urban land in the US.

Why Parking Lots Are North America's Biggest Redevelopment Opportunity

In an ideal world, North American cities would follow the lead of many European cities and address the issue by reducing the need for cars altogether. That means major investment in public transportation and alternative infrastructure, some of which is already underway. But progress is slow, and it will likely continue to be. Cities and developers cannot simply jump into the deep end and eliminate parking overnight.

That leaves cities with a kind of Plan B. It is not revolutionary, but it is practical: consolidate parking and move it somewhere other than street level. A parking garage, you might say? Yes, exactly. For now, that is the simple interim solution. The challenge was never really figuring out what could replace the surface parking lot. It was finding the means, money, and political will to actually do it. For private developers, depending on the city and site conditions, a single underground parking stall can cost anywhere from roughly $70,000 to well over $100,000, with particularly challenging projects exceeding $200,000 per space. The solution isn't a lack of alternatives; it's the enormous cost of moving parking below grade.

What Is Tax Increment Financing (TIF)?

One way cities have started paying for these expensive parking structures is through Tax Increment Financing (TIF). Rather than relying on existing tax dollars, TIF allows municipalities to borrow money upfront to fund projects like structured parking, streetscape improvements, or other public infrastructure. As new development occurs around the project, property values typically increase, generating additional property tax revenue. Instead of flowing into the city's general budget, that increase in tax revenue, known as the "tax increment," is used to pay back the original investment. In theory, the parking garage helps unlock higher-value development that would not have been feasible otherwise, and that new development ultimately finances the cost of the garage itself.

If TIF is such an effective financing tool, why isn't it used more often? The simple answer is that it only works under the right conditions. A project must be expected to generate enough new property tax revenue to repay the upfront investment, making TIF far better suited to growing downtowns and redevelopment areas than places with stagnant or uncertain growth. It also requires political support, careful financial planning, and a willingness to invest before the returns are realized. While these hurdles mean TIF is not appropriate for every project, successful examples across North America have shown that, when applied strategically, it can be a powerful way to finance the infrastructure needed to unlock higher-density, mixed-use development.

The Banks Cincinnati: A Successful TIF-Funded Parking Lot Redevelopment

One of the strongest examples of this approach is The Banks in Cincinnati, Ohio. Built on an 18-acre former surface parking district between Paycor Stadium and Great American Ball Park, the project relied heavily on Tax Increment Financing to deliver the public infrastructure needed before private development could occur. Rather than preserving acres of surface parking, Hamilton County issued more than $22 million in bonds to help fund a $29.3 million, 690-space structured parking garage, with the debt repaid using tax increment revenues generated by earlier phases of the project. The garage was never intended to be the destination itself. It created the foundation for new residential buildings, retail, offices, hotels, and public space while lifting future development above the floodplain. Today, The Banks contains hundreds of apartments, over 150,000 square feet of retail and restaurant space across its first phases, and has reconnected Cincinnati's downtown to its riverfront in a way that surface parking never could.

The Future of Parking Lot Redevelopment

Surface parking lots may be some of the greatest development opportunities left in North American cities. Unlocking their potential requires more than creative financing or ambitious architecture alone. It takes both a viable economic strategy and a compelling vision for what the land can become. When those two align, spaces once dedicated almost entirely to storing cars can evolve into places that contribute far more to the life of the city.