OUR THOUGHTS ON:

The Autonomous Vehicle Revolution and Its Impact on Commercial Real Estate

Automobile|Professional Services|Real Estate|Technology|Transportation & Logistics

By Carl Scharf

Driverless vehicles are coming and will dramatically change the commercial real estate landscape. Many of the world's largest corporations have been investing billions in the technology.

Google has been testing a self-driven Prius in California since 2009, and has logged more than two million miles after expanding its operation to Arizona, Texas, and Washington. Uber began an autonomous vehicle (AV) pilot program in Pittsburgh in September 2016.  NuTonomy, a technology start-up company in Massachusetts, is running public trials of self-driving vehicles in Singapore and Boston.  Tech giant Apple is pursuing AV opportunities, as are Ford, General Motors, and the rest of the automobile manufacturers. Electric car innovator Tesla Motors already has partial driverless technology available as a technology package add-on.

 There are many differing opinions as to when driverless vehicles will take over the auto industry landscape; however, many experts believe that we will see a major presence on U.S. roads by 2025.  When the change comes, many aspects of the commercial real estate industry will be primed to benefit, while other aspects may suffer.  There will be winners and losers.  Where will the greatest impact be?

History has shown that property values will certainly be impacted, similar to the turn of the 20th century, when society moved from horse & buggy transportation to automobiles.  Sought-after locations that may be easy to travel to by car, or where parking is cheap, will be less attractive if people can call upon a robot car to go anywhere, anytime.

Additionally, the urban-suburban dynamic will be affected.  People may be drawn to suburbs because commuting in an AV is less stressful and more productive – you can work during your commute into the office.  And downtown parking would no longer be an issue.  Unused parking garages and gas stations can be converted into residential, recreational, or other commercial uses, potentially making a city less expensive and more attractive to newer demographics.  Cities and commercial building landlords will also have to consider redesigning roadways and drop-off zones due to reduced congestion and more people coming and going.

Advocates of autonomous vehicles assert that removing the human from the transportation equation will make roads safer and more efficient, resulting in a happier, more productive and less energy-dependent world.  Regarding issues of safety, many studies have found that human error contributes to 90% of all automobile accidents. 

The trucking industry has already begun a transition to autonomous vehicles.  Executives and investors envision truck fleets absent the cost of drivers’ salaries.  Logistics companies such as FedEx, UPS and DHL foresee a future in which driverless vehicles can fully automate deliveries.  With no human behind the wheel, trucks could potentially drive through the night without a required stop every eight hours.

On the other hand, AVs could pose a threat to many professions, such as truck and taxi drivers, auto insurance agencies and car dealers.  People working in these industries may be challenged to find ways to adapt. 

It’s fun (and scary) to dream about a day when cars will drive themselves.  Vehicles will not need to park near the humans they transport.  They will simply keep moving from passenger to passenger, stopping only to refuel or for repairs.  The concept of traveling to work or for leisure will be entirely different. This will affect how and where we live, what we buy, how we design and construct buildings and transportation infrastructure.  Ultimately, the greatest obstacle to overcome will be the prejudices and predispositions of the driving public.  Riding in an autonomous vehicle will require a leap of faith for many.

Our professionals will continue to monitor the developments and will provide updates. Visit the Our Thoughts On blog for more articles.

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