The Case for Auctioning New York City’s Parking Spaces

New York could allocate parking more efficiently—and raise billions—by letting the market decide how curb space is used.

Courtesy Gautam Krishnan/Unsplash

What if there were a way to efficiently allocate parking spots in one of the world’s most valuable urban land markets while also raising a ton of revenue? In New York City, there is. The city’s on-street parking spots are mostly free and poorly allocated. Using that space more efficiently could generate billions in revenue each year.

The city, which is desperate for new revenue streams, is considering charging for more of its on-street parking, much of which is currently free. Pricing spaces—whether through dynamic pricing, parking permits, or other mechanisms—would certainly be an improvement. But there is an even better approach: auction the spaces and allow users to determine their most valuable use.

New York has an estimated 3 million parking spots, of which roughly 97 percent are free. But free parking isn’t really free; drivers in the city spend an estimated 107 hours per year on average looking for an open space—time wasted circling the block, clogging traffic, and burning fuel.

The hidden costs are even larger once the alternative uses—or opportunity costs—of those spaces are considered. With roughly 3 million parking spaces averaging about 180 square feet each, New York devotes more than half a billion square feet of street space to parking. At an average land value of $119 per square foot, the value of all that space amounts to more than $64 billion.

Yet much of it is not being used particularly well. Free parking encourages people to keep cars—and to drive them—even in a city where most trips could easily be made by subway, bus, bike, or on foot. When parking a vehicle costs nothing, many residents conclude that they might as well keep a car, even if they rarely need one.

Charging for the use of such valuable public space therefore makes sense. But among the available options, an auction would deliver the greatest benefits to the city and its residents.

Here’s how it could work: the city could create a digital map of every on-street parking space and auction year-long leases to each spot. Individuals and businesses would submit bids indicating the highest price they are willing to pay. The city would then use a “second-price” auction—where the highest bidder wins but pays the amount of the second-highest bid. (This format encourages bidders to reveal their true willingness to pay, discouraging strategic underbidding.) The winner would acquire the lease to that curb space and be able to use it in a variety of ways, as long as no permanent structure is built.

Auctioning curb space offers several advantages over simply adjusting parking prices. For one, it allows the land to be used for a much wider range of purposes. While many spaces would undoubtedly remain for parking, others might become outdoor dining areas for restaurants, Citi Bike docks, taxi stands, delivery zones, or small public plazas. Rather than city planners guessing which uses are most valuable, auctions would allow the market to determine the best use of each slice of curb.

The possibilities are broad. Department stores could bid on spaces for additional loading zones, reducing delivery costs and congestion. Businesses in high-traffic districts—say along Fifth Avenue—might even pool resources to lease multiple spaces. Neighborhood associations might create micro-parks, while rideshare platforms could establish designated pickup areas.

Restaurants could also acquire a reliable way to expand outdoor seating. Currently, only 40 restaurants have received permits from the Department of Transportation to convert curbside spaces into dining areas, thanks to burdensome requirements that include community board approval and public hearings. The city council is now considering reforms to the system. Allowing restaurants to simply acquire spaces through an auction would benefit both businesses and customers.

Of course, in many parts of the city, curb space would continue to be used for parking. In neighborhoods such as Downtown Brooklyn, Park Slope, Long Island City, or the Upper West Side, the demand for vehicle storage would likely remain strong. In areas with abundant curb supply and fewer alternative uses—places where people truly rely on their cars—prices would remain relatively affordable, but spaces would go to those who value them most.

In denser commercial districts, meanwhile, private operators might bid for spaces and rent them by the hour using dynamic pricing. A “performance pricing” model—where rates adjust throughout the day to maintain roughly 85 percent occupancy—helps ensure that spaces are used efficiently while keeping at least one or two spots open on each block. That reduces congestion from drivers circling for parking and nudges some travelers toward alternatives like transit.

Allowing leases longer than one year—perhaps up to five—would also make sense. Longer terms would give businesses the certainty needed to invest in semi-permanent improvements such as outdoor seating. But the city should retain ownership of the underlying curb space and periodically re-auction the leases so that revenue rises alongside land values. That would avoid the mistake Chicago made when it sold the rights to its parking meters for 75 years, locking in revenue far below what the spaces later proved to be worth.

Concerns that the city might “lose” too much parking under such a system are misplaced. If parking demand truly exceeds other uses, auction prices will reflect that, and many spaces will remain dedicated to vehicle storage. And if demand grows further, the price signal would encourage private garages and other parking infrastructure to expand.

An auction of this kind could also generate substantial revenue for the city. Using simple assumptions about typical bids across neighborhoods, a citywide auction of curb spaces could plausibly generate nearly $3 billion annually for New York’s budget.¹

Of course, some drivers will oppose any attempt to eliminate “free” parking. People rarely like losing something they perceive as theirs—even if it was always a subsidy.

But Michael Manville, chair of UCLA’s Urban Planning Department, offers another perspective. In an interview with City Journal, he suggested that the city could dedicate a portion of each neighborhood’s auction revenue to local improvements, as his professor, the late urban economist Donald Shoup, had long called for. “Take a portion of the revenue that each neighborhood raises and say, ‘This is a dedicated neighborhood fund,’” he said. Rather than losing something, residents would gain a new source of funding for parks, sidewalks, and other local priorities.

New York City Mayor Zohran Mamdani has vowed to “meet every moment of fiscal challenge with ambition.” Auctioning New York’s curb space would certainly qualify. It would raise billions in revenue, reduce congestion, and allow some of the city’s most valuable land to be used in ways that are far more creative, useful, and productive.

1. Assuming 5 percent of spots (150,000) in high-demand locations would average $6,000/year ($900 million), that the next 25 percent of spots (750,000) in medium-demand locations would average $2,400/year ($1.8 billion), and the remaining 70 percent of spots (2,100,000) would average $480/year ($1 billion). The total is based on current private parking prices (source: Spacer.com), with an assumed 50 percent curb discount rate. An estimated cumulative $3.7 billion of annual revenue minus $773 million from existing meter revenue and fines equals $2.9 billion in new revenues.