Well, the trash on the pavement is taking up space, too.

Proper bins could pile the trash higher, so they would take up less floor space than the random distributed piles.

And as other commenters point out, you could sacrifice some parking spots.

> could pile the trash higher

I don't actually think you can get denser storage, at the moment, than the raw piles of garbage bags. In some places, they are absolutely willing to pile them higher than people stand, sometimes, and proper individual trashcans would sacrifice some space for their size, and actual dumpsters would be pretty disruptive to place since there's not much in the way of locations to land them on.

The trash bag piles also have the nominal benefit that they're transitory - that is, you don't have to permanently say "this space will only be used for trash storage", and with a place with space at such a premium sometimes, that really does matter.

(I'm not fond of the bags either, but short of the city dropping a truly astonishing amount of money on trying to buy up properties on each block to keep dumpsters in, as far as I can see, just getting the rolling bins out and about is the best reduction you can hope for.)

There is plenty of space, but most of it is taken up by individuals’ cars.