The Coming Collision: Driverless Cars and Commercial Real Estate
HOUSTON – (By Dale King, Realty News Report) – Driverless cars of the future are on a collision course with office buildings, warehouses and shopping centers.
In a newly released study called “The New Industry Driver: How the Rise of Autonomous Vehicles Could Impact Future Real Estate Strategy,” researchers at Houston-based real estate firm Transwestern contend the snowballing potential of driverless cars, trucks and warehouse equipment could significantly impact every sector of the commercial real estate industry.
The Transwestern research says “one assumption frequently made in relation to autonomous vehicle technology is that car ownership will decrease as adoption of AVs, through ride-sharing services, increases.” If this trend comes to fruition, the document predicts some notable changes will occur in the urban landscape:
Traffic congestion would be reduced, freeing up space for other uses, such as pedestrian walkways, retail or restaurants.
Demand for parking would diminish, causing a re-examination of parking requirements and an opportunity to reposition or redevelop garages, surface lots and underground parking structures.
Public transit usage would increase, perhaps complementing first- and last-mile ridership from transit stations and enabling employers to attract talent from a larger radius.
Fewer driver-caused accidents would [occur, reducing] the inflow of injured patients to emergency rooms, trauma facilities and rehabilitation center.
Transwestern’s study underscores the good that fewer cars on the road will bring, like “a dramatic reduction in parking needs.” The document references one specific example which already exists. In New York’s Times Square, a 270,000 SF pedestrian walkabout and patio area was recently completed as part of a “recapture project.”
Also, Summit, N.J. has partnered with Uber to subsidize rides to and from the train station there, “minimizing the need for additional parking downtown.”
The report goes on to say office spaces of the future will likely bear a different look and layout. Of the current 11 billion or so square feet of office space in the United States today, roughly 2.5 billion is located within Central Business Districts (CBD).
Adrianna Boursalian, a research associate for Transwestern and a report co-author, outlined some of these anticipated variants. “Features such as curbside pickup and ride-share lobbies could become more prevalent as building tenants and visitors increasingly demand them as next-generation Class A office conveniences,” she said.
Shopping center owners and developers should also keep an eye on the growing AV trend, says the report. A typical suburban mall sits in the center of an expansive parking lot, usually several times the size of the mall footprint. As with office properties, vast parking areas at malls may no longer be needed. Those with vast amounts of acreage for parking may be more desirable to investors looking for redevelopment opportunities.
Transwestern predicts the industrial sector will see the most disruption from the implementation of AVs, particularly when it comes to increasing efficiencies in warehouse operations, logistics and, particularly, trucking.
“With approximately 70% of goods delivered via long-haul commercial trucks – a gap expected to widen in the future – the introduction of autonomous long-distance haulers would be a welcome addition to an industry suffering with an estimated deficit of 48,000 drivers (2015 figure). Both Daimler and Otto (Uber’s AV division recently renamed Uber ATG) have already successfully tested self-driving truck capabilities for long-haul, non-stop delivery.”
The success of this venture, says the report, depends on “how the logistics sector reacts to the deployment of autonomous long-haul trucks.”
But the document seems to give short shrift to one of the most personal influences of driverless vehicle usage: Are automobile owners willing to give up their privately owned autos in favor of turning their transportation demands over to a flock of computerized robo-vehicles with no human presence behind the steering wheel?
“While there are valid concerns about safety, security, government regulation and the potential resistance to give up private cars, the billions of dollars invested by domestic and foreign automakers, countless engineering and design firms and giant technology conglomerates have made autonomous vehicles (AV) a reality,” said Jamie Mahoney, a research analyst in Transwestern’s San Francisco office and a co-author of the report.
He noted that “while timing of AV adoption is debatable, a disruptor of this magnitude will likely have implications for office, industrial, retail and healthcare properties and create opportunities to unlock value from real estate.”
Mahoney said, “Our main focus is not on technology, but on changes in the real estate aspect.” He did point out that a segment of Transwestern’s report included information from a study done by RethinkX, a firm which describes itself on its website as “an independent think tank that analyzes and forecasts the speed and scale of technology-driven disruption and its implications across society.”
In his interview with Realty News Report, Mahoney did seek to allay fears that America’s highways would be overwhelmed with a fleet of ownerless cars with naught but one or more passengers inside. He said Transwestern’s report on the impact of driver-free vehicles would stand even if RethinkX’s predictions didn’t all hit their mark.
He did, however, refer to the think tank as “a pretty reliable source,” pointing out that most auto owners leave their privately owned vehicles “sitting there 95% of the time.”