How the 1 percent park: $1 million parking spots
The surging fortunes of the top 1 percent of America's earners are boosting a small segment of the real estate market: parking spaces.
Cities ranging from New York to London are witnessing record price tags for these slivers of property, thanks to the deep pockets of wealthy residents and increasingly scarce space. Two new luxury buildings in New York are asking $1 million for a single parking slot, according to The Wall Street Journal. In San Francisco, prices for a parking spot in a prime neighborhood now fetch $125,000, up from about $40,000 to $70,000 a few years ago.
Spaces are also going for a premium in large international cities where the wealthy tend to cluster. One sliver of land in London just sold for $314,000, providing a parking space for its new owner in the ritzy South Kensington neighborhood. Private parking space in the neighborhood is so rare that a bidding war broke out over the land, which is a narrow lane that's wide enough to fit a car but can't be developed.
"'Kensington is known for its prime real estate, with most homes having million-pound price tags," Annabel Haan, head of residential development for Colliers, told the Daily Mail. "The sale ... is indicative of the lifestyle and needs of local residents."
The sale price for the parking spot is higher than the average price for a home in the U.K., which stands at about $307,000, according to the publication.
Other cities that are witnessing skyrocketing prices for parking spaces include Sydney ($264,00) and Hong Kong ($547,000).
America's richest households, or those with earnings of at least $1.3 million, saw their annual income rise 10.8 percent in 2014, according to the Washington Center for Equitable Growth. Incomes for the bottom 99 percent of families, meanwhile, rose just 3.3 percent last year.
Of course, these record-breaking prices are for parking spots in newly constructed luxury buildings, or in neighborhoods that function as the playgrounds of the wealthy. Yet the rank-and-file in many of these cities also pay a small fortune for parking, although some of the methods have changed.
Take the startup Luxe, which has built a business on providing valet parking services to residents of cities including San Francisco, Seattle, and New York. Customers use an app to summon valets to pick up their vehicles, which the valets then drive to a lot. The cars are also washed and fueled.
When the customer needs her car again, she can use the app to request that a valet drive it to the appropriate location. That may sound pretty sweet to New Yorkers who are tired of dealing with alternate-side-of-the-street parking, but Luxe doesn't come cheap. According to Crain's New York, it costs about $400 a month in Manhattan, or $4,800 per year.
Still, that seems like a bargain compared to a $1 million parking spot.