Someday, traffic jams and parking lots will be a distant memory.
It’s been predicted that most people won’t actually stop driving for at least another 15 – 20 years, but a driverless future is coming. Google and Tesla are aiming to launch cars that drive themselves as soon as possible, and Uber recently founded a R&D team to focus on driverless vehicles.
The impact driverless cars will have on the economy and transportation habits might seem obvious, but what have you thought about their impact on cities and CRE?
Rather than purchasing a driverless car of their own, many individuals will likely access a fleet of automated vehicles that are available to all. And when they don’t have a passenger, those cars will either remain in constant motion or will park in remote areas. This means structures and spaces currently used for parking near retail stores, offices, homes and other highly trafficked areas will be available for redevelopment.
A total revolution in the way we travel and park is coming, and it will impact the CRE industry and the work you do in major ways.
Shifts in use of parking areas and vehicle-centric businesses
If self-driving cars never stop moving and simply cruise at low speeds until they pick up a passenger, the need for parking could be eliminated entirely once we move to a 100% self-driving society. But problems like traffic congestion and air pollution could keep an always-in-motion self-driving fleet from becoming a reality.
Instead, parking is likely to become industrialized as self-driving cars take off. Because self-driving cars will also self-park, we’ll have no need for parking spaces that are optimized for human use. Passengers will get dropped off at their destination, and cars will then drive themselves to fully industrialized parking garages located in more remote, less desireable areas. This will lead to a rise in asking prices for remote warehouses and industrial structures, and create new opportunities for you.
Imagine the myriad of ways we could redevelop existing parking areas in prime locations.
14 percent of Los Angeles County land is dedicated to parking.
In some cities, like Houston and Arkansas, that figure is even higher.
Once self-driving cars are the norm, almost all of this space will be available to be redeveloped for housing, retail, office spaces or recreational use.
Additionally, car dealerships, repair shops, car washes and any other auto-related service will no longer need to be concerned with the human experience and will become as industrialized as parking garages. These establishments will also move outside of city centers, opening up more centrally located real estate for new use.
Changes in pedestrian patterns around buildings
Once we’ve made the change to an all autonomous vehicle society, things like traffic lights and turn lanes will no longer be necessary for cars to operate safely and efficiently. Cars will simply be able to detect when and where it’s safe to move.
Pedestrians and bicyclists will utilize space and flow through cities very differently.
Specific pedestrian walkways separate from main streets will be established and public health might even improve as more people feel comfortable walking and biking.
Along with the extinction of street parking, this change will create opportunities for retail and sidewalk dining in areas that were previously terribly traffic-heavy. Plus, the removal of parked cars from streets will elevate the overall appearance of neighborhoods, raising the value of multi-family buildings in locations where street parking is currently prevalent. Once city neighborhoods are less congested, demand for “missing middle” homes in walkable urban centers will rise. This is something worth discussing with investors and developers.
No more traffic
Today’s Americans lose $160 billion worth of time and gas in traffic and spend hundreds of hours driving each year. Once we remove human error from the driving equation, traffic flow will get people where they’re going more efficiently and eliminate much of this waste.
We’ll stop wasting our time driving, and start spending more of it doing what we love.
There are some things we just don’t want to do after a long day of work and a restless commute home. But once our vehicles become autonomous and our commutes become enjoyable or more productive because we can work while we travel, we’ll be more likely to want to shop, socialize with friends, go out to eat or go to the gym. Business for retail, restaurants and other experiential locations will see a boom, and investments in these spaces will increase as a result.
With traffic out of the picture, people will be willing to travel further distances because it will be a faster and more pleasant experience to get from point A to point B. The classic real estate cliché, “location, location, location” will no longer be nearly as much of a concern. The value of commercial real estate further from city centers and in secluded locations will go up.
While these changes may seem like dreams of a distant future, autonomous vehicles will begin to become a factor in CRE before you know it. Consider what’s coming now and use that knowledge to inform the forward-thinking discussions with investors.
Want to know more about how up-and-coming tech developments are going to shape the future of CRE? Check out our blog: Virtual reality: rendering offices obsolete?