Impact of Autonomous Cars on real estate

My Thoughts on the Massive Impact Autonomous Cars Will Have on Real Estate

Joe Stampone Featured, Innovation/Technology 9 Comments

Autonomous cars will be pervasive in the next 5-10 years. They will be safer and more efficient than human drivers and they’ll all be electronic.

There’s no doubt autonomous cars are coming soon and the impact on the real estate industry will be massive. However, very few in the real estate industry is talking about it and even less are preparing for the impact it could have on their business.

Over the past several weeks, I’ve been chatting in a private forum with a few real estate buddies about the impact autonomous cars could have on the real estate industry.

The post that follows is a collection of our thoughts/questions on how autonomous cars will impact the real estate industry and what real estate professionals should be thinking about.

Parking

  • Street parking will go away, adding more space for pedestrians or other uses. Parking lots and structures will be moved to areas where land is cheaper.
  • Parking requirements will go away, bringing down the cost of construction and increasing affordability.
  • “Reports estimate self-driving vehicles have the potential to reduce parking space by about 61 billion square feet.”
  • Self-driving cars will need to nest somewhere, likely large parking garages in low-cost areas.

Housing Decisions / Suburbs

  • It’ll change where people choose to live since ‘access to public transit’ is everywhere. The easier access will shift residential value from properties in urban centers to those in suburban areas.
  • People will be ok taking longer commutes and go out in bad weather.

Retail

  • Big box retail, which is based on the arbitrage of land costs, transport cost, and people’s willingness to drive and park, will go away.
  • How does urban retail change if there are no cars parked on the street out front? Wider sidewalks, landscaping, retail seating etc.
  • Mall parking lots can be used for additional retail and restaurant development or even residential uses.
  • Grocers could use their stores as distribution centers for home delivery.

Office

  • Parking garages integrated in large CBD offices will go unused.
  • Reduced demand for suburban office, but the design impact is less severe; suburban office parks will become denser and buildings will be placed closer to the road and one another.

Multifamily

  • Garden style apartment communities can use the parking space to add more units or new amenities.
  • Converting integrated parking within mid-rise and high-rise apartments is more difficult.

Hotels

  • The need for lodging could drop as people sleep in their cars during overnight road trips.
  • “Audi’s vice president of brand strategy and digital business, predicted that car interiors will eventually be able to morph between driving mode and sleeping mode, presenting a major obstacle for the hotel industry.”
  • Select and limited service hotels can develop more rooms on the existing parking areas.

Industrial

  • Industrial nodes will be reliant on centrality due to the removal of maximum trucker times for distribution. However, access to labor is still important (but, as noted earlier, people may change where they choose to live).
  • Autonomous trucks could deliver products directly to the end user, eliminating the industrial ‘hub & spoke’ network.

Other Considerations

  • Most of the 150k gas stations in the USA will go away.
  • With no accidents, most collision repair shops will go away.
  • Reduce the demand for public transit. Does the premium of being located next to transportation hub go away?
  • Could residential parking garages be converted to self-storage?
  • Home garages can be converted to storage, home offices, spare bedrooms etc.
  • Entryways to high-rise residential buildings will need to be redesigned to accommodate high-volume pick-up.

It’s fascinating discussion and one that I think real estate professionals need to spend more time thinking about.

“Just as it was easy to predict mass car ownership, but hard to predict Wal-mart, it’s easy to see self-driving cars are coming, but hard to predict what the impact will be on real estate.”

Benedict Evans, A16Z

What do you think the impact of autonomous cars will be on the real estate industry?

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  • Joe Fairless

    hadn’t even thought about this. Fascinating topic.

  • @joefairless:disqus you’re not the only one. Seems very few in the real estate industry are thinking about it, but I’m not sure why that’s the case. Any ideas?

  • Sean Sweeney

    When you’ve got a good thing going, it’s hard to look ahead and be honest about what could be a major disruption to your business. Much easier to dismiss. It’s often why companies like AirBnb, Uber, etc are started by people outside those industries.

  • The execution will be a little messier than projected. If everyone gets a ride to work traffic doesn’t get any better. If everyone gets a ride in a single occupant autonomous car (acar) traffic gets worse as people abandon public transportation; buses, trains, etc. If everyone gets a ride in a single occupant acar the scramble for parking becomes a scramble for spots at the curb for drop-off and pickup; forget about extra room for pedestrians, the front of every office building will be a giant loading zone. The issue of latent demand for roadways is not going away but may well increase. The issues of surge demand (going to and from work, the football game, the U2 concert) will still exist. And the transition will be full of unintended consequences.

    The sfr builders are all about the suburban white picket fence dream but I think that will turn out to be more nostalgia than solid business plan. Think about New York City and how many people live there… and how many more would if they could afford it or more housing was available there. That same thing is happening in every city in North America… and the world.

    The hope is that as Millennials finally get decent jobs, pay off their college debt, get married, decide to have kids that they’ll want to do it in the suburbs. I think those young parents are going to be much more jealous of their time and won’t be willing to spend it sitting in a car even if they can text and hit social media. This will result in amenities for babies, toddlers and school age children being improved in the urban core; daycare, quality of schools, etc. It will also favor surban development; live, work, play settings connected to transportation hubs linked to urban centers; not in sprawled out, car dependent sfr developments.

    Not saying Ubering an acar won’t be awesome or sleeping your way to grandma’s for Thanksgiving won’t be fun but I wouldn’t abandon downtown yet-

  • Interestingly Curbed just put out a post on the impact of acars and the issue of loading zones: https://www.curbed.com/2017/5/16/15644358/parking-real-estate-driverless-cars-urban-planning-development

  • Chloe Carbone

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  • @Giovanni_Isaksen:disqus thanks for sharing. There still seems to be so many unknowns, that few groups have enough conviction to act. I’m curious as to how this will play out over the next 5-10 years. Disruption creates opportunity….