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Originally Posted by edale
these lots [...] serve as maintenance-free money generators for the owners. [...] there's little to be gained (from the owner's perspective) by developing them as anything else.
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You are fully correct on this part, but you're wrong on this one:
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There is no need to 'get people out of their cars' to develop these lots. That's not what's holding development back.
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For the record, I've been owning parking lots in the downtown of my hometown for many years now (yes, I'm somewhat "part of the problem", I don't deny that
). They did something smart a few years ago - even though it had a negative effect on me, I admit it's for the greater good - which was to drastically raise the tax rate on vacant/parking land within the perimeter of downtown, in order to push people like me to either build or sell to someone who will.
My parking lots have been really wonderfully headache-free for a real estate asset. Best of both worlds in fact - as trouble-free as stocks but as long-term "solid" as real estate. (I also have a bunch of old buildings in the same downtown, so I know what I'm talking about when contrasting the two!)
As you say, there's little to be gained trying to do something else with these parking lots as long as they are maintenance-free money generators. (This is exactly why mine are still full of cars as I write this - actually only half-full these days due to WFH from Covid, but that's temporary - rather than with buildings on them.)
However, should people stop needing parking downtown (or even just not need it anywhere as much as they currently do), it would change things: these real estate assets would stop producing decent cashflow. An empty downtown lot would be cashflow negative (property taxes and a modicum of mowing/landscaping).
Sure, maybe SOME people would still want to hang on to theirs for speculative purposes, but many (and I'm among those) would not tolerate that, and would build something on these lots. (Or sell them to someone who'll develop them.)
So, yep, the fact that people in Little Rock all drive to their downtown offices, and need parking there which is something someone has to pay for, is the reason these lots are not getting developed. If you couldn't get decent cashflow from these lots by using them as parking (lucrative parking lot being the dreamiest land use from an individual landlord's POV), many of them would get developed. (Or else left as urban prairie, if Little Rock was as bad as the worst areas of inner city Detroit; I really doubt that it is.)