Ready or not, the next wave of tech comes in the form of a self-driving car. From Google, Tesla, Uber, Amazon to just about every major vehicle manufacturer in the world it’s clear that the impact of self-driving cars is just going to continue to be more prevalent in our lives. Every major company wants a slice of the pie, which we saw at CES 2017. According to ExtremeTech, every manufacturer has their own vision of what the future of self-driving cars will look like, but their ultimate goals align – safety, connectedness, and productivity. The automobile industry is looking to eliminate human error and dramatically reduce the risk of deaths related to driving. They also stress that connectedness, which increases productivity, is important not just in our personal, but also in our professional lives.
Technology is advancing daily, but it feels like just yesterday I was watching futuristic cartoons, like The Jetsons, with autonomous vehicles playing a central role in the everyday life of the shows’ characters. We aren’t quite flying through the air like The Jetsons, but the era of self-driving cars is definitely upon us. Self-driving cars will eventually change transportation forever, but how will this impact commercial real estate?
Commercial real estate can expect to see changes stemming from advancements in the automobile industry and the time to start planning is now!
Working While Riding
It’s clear that self-driving cars will impact public transportation but will they become the predominant means of transportation? Even today, many people have crunched the numbers and decided it’s more cost effective to take a ride share vehicle to work rather than own a vehicle of their own. When there’s the ability to hail a self-driving car I expect the number of sold personal vehicles to decrease. When the cost of a self-driving car ride share becomes cheaper than driving yourself it’s a no brainer. Why not sit in the back of a car and answer emails while enjoying your breakfast vs fighting your fellow commuters in traffic and thinking about your growing backlog of emails waiting for you?
When more people opt out of owning and driving themselves that means there will be a lot of unused parking lots. As a commercial real estate broker this should be exciting news. The ability to reduce parking lot sizes opens up many opportunities. Eliminating, or even reducing the size of a parking lot means that there will be more space for real estate to expand or maybe even build an additional project.
Invision a building with a pickup and drop off section and a small parking lot. The new wave of construction in commercial real estate could hold more occupants per square foot with just reducing parking alone. This also means that we will see a lot of older buildings getting revamped to turn those parking garages into modern office space.
Location, Location, Location
As we all make the shift to self-driving cars the stresses of a daily commute will decrease. With productivity starting on the commute rather than once you arrive in the office it will become increasingly less important to live close to the office. Cities will organically start to expand further from the city center without the impact on our daily lives. With cities expanding, secondary markets will see growth since we will be more willing to put up with that morning commute.
Manufactures will also start to see change. Today, manufactures are in hubs and close proximity to ports to mitigate costs. Autonomous cars will have impact on freight being able to drive 24 hours with less focus on where. Manufacturing is expected to de-cluster these sectors promoting development of industrial buildings in less costly areas. Combined with people taking advantage of moving away from urban areas, the fundamental theme of “location, location, location” will diminish with driverless cars and freight.
How are you preparing your brokerage for the expected impact of autonomous vehicles? REthink CRE is here to make sure your brokerage stays ready for the future. Click here to schedule a demo.