My understanding is that there are tax advantages to leaving parking lots as parking lots and not putting buildings on them. It would be interesting to discover the exact nature of these policies (which may vary on a community by community basis).

It may not be an either/or situation. Unless they are being used as markets all the time it may be possible to use a space as a parking lot and as a market, only at different time, similar to how the parking lot at Lansdowne park is currently being used (for the organic farmer's market).

An important question to ask might be what level of government actually controls the tax rules for parking lots... it may not actually be entirely controlled municipally...