The biggest market consideration in this bustling mini-metropolis was how to repurpose the vacant parking garages when autonomous vehicles become imbedded in our daily lives.
In a conversation with a prominent local real estate developer, whom I respect as a forward thinker, we discussed the current state of the central business district in Dallas, and in particular Uptown, which has become saturated with new office, residential, and retail product. We were discussing the biggest issues facing the booming and seemingly crowded hub, which I foolishly thought were: walkability, parking, and overcrowding. However, his viewpoint on the CBD changed my perspective. He explained that the biggest market consideration in this bustling mini-metropolis was how to repurpose the vacant parking garages when autonomous vehicles (AVs) become imbedded in our daily lives. I was dumbfounded by his answer, and thought perhaps it was a moot point, considering that implementation and culture adaptation of AVs might just be a pipe dream.
Fast forward six weeks, when I read a white paper published by my own company, Transwestern, on the evolution of the largest disruptor in real estate: autonomous vehicles! This is coming from a commercial real estate company, not a flashy magazine touting futuristic thinking. After reading the article, I realized that Ted Hamilton, the forward-thinking developer, was, in fact, correct. Autonomous driving was being adopted currently, and it would change the landscape of the CBD. AVs would have an impact on transportation, city infrastructure, real estate assets and the environment.
While I have been driving around with my head in the sand, GM, Ford, Google, Lyft, Uber, and plenty of startups have been investing billions in design, technology, and testing of prototypes that could change our lives in a magnitude comparable to the invention of the automobile. AVs are currently driving around Phoenix, Cincinnati, and San Francisco and have logged more than 3.5 million miles.
With both GM and Ford planning to have AVs on the roads by 2020 or 2021, this fundamental change is no longer a thing of the future—it is happening now. The technology needed to make driverless vehicles safe and effective has already been developed and implemented into many models. If driverless cars and trucks become mainstream, they have the potential to change our lives in many very positive ways.
As more and more people come to the cities, the main negative consequence will be congestion and pollution. Electric and hybrid AVs could solve both of those problems by moving people quickly and safely to their destinations. AVs could pick people up, drop them off at their destination, and then immediately move on to another customer—just like ride-sharing services today, but without a driver.
Research shows that widespread adoption could decrease private ownership of automobiles. That could result in $1 trillion in savings to per year. And there are some very compelling reasons for adoption: safety, economy, and convenience.
Since 94 percent of all accidents are due to driver error, removing the driver component could mean 40,000 fewer people killed each year and 2.5 million fewer people each year who are injured and must go to a hospital or rehabilitation facility. Driverless trucks could prevent the 40,000 truck accidents each year. This means how we design and use hospital facilities could look very different in a fully AV world.
The savings from not owning a car could also ripple down to car repair operations, car dealerships, gas stations, and even auto insurance companies.
As this future quickly becomes reality, we would have to wean ourselves from our status symbols, but that is already happening. Recently announced, that for a monthly rental fee, you can drive almost any Porsche whenever and wherever you want. Other brands will likely follow suit if they haven’t already. If everyone can drive a luxury vehicle, they suddenly lose their status and appeal. Naturally, people will instead focus on efficiency, since, after all, time is a valuable commodity.
Rapid adoption will cause huge changes in the built environment as well. For example, look at the garages in new apartment construction. They are flat and tall. That way they can be repurposed into retail, residential or recreational amenities if demand for parking decreases.
AVs can impact not only transportation but also office buildings, warehousing, retail, supply chains, and logistics, and healthcare facilities, presenting opportunities for existing and future commercial real estate stakeholders. This means now is the time to start thinking strategically on how AV technology might affect real estate assets.
Sanders Thompson is a principal of tenant advisory in Transwestern’s office division.