How will the autonomous and driverless cars of tomorrow impact commercial real estate?
It is time to start envisioning the future of CRE in terms of self-driving cars. A future in which unnecessary parking structures and parking lots have the potential to transform into real estate leads and be redeveloped as residential, office, self-storage or retail space.
In September 2016, the first self-driving Uber cars hit the road, within a 12-square-mile section, of downtown Pittsburgh. Each car was equipped with a “safety driver” in the front seat in case human intervention was needed. According to a recent Wired article, the cars are Ford Fusions outfitted with a spinning LIDAR system on the roof and a touchscreen tablet that provides information about the vehicle, how it operates, when it’s driving itself and what it “sees.”
If you’re looking to ride in a self-driving car, you don’t have to travel to Pittsburgh for the experience – you can now purchase one for yourself. On October 19, the company announced that every new Tesla will be fully capable of driving itself. Tesla’s new hardware and software system “will reach level 3 autonomy in the coming months and level 4 and 5 should follow for complete autonomy by 2018” according to CEO Elon Musk. A level 3 car provides conditional automation, while level 5 requires no human driver as set by SAE International’s standard.
Musk is also pledged that by the end of 2017, “he’ll produce a Tesla that can drive itself from Los Angeles to New York City, no human needed.” in another Wired article. The article points out that, if achieved, Musk will be years ahead of every other big player working on creating level 5 autonomous cars.
When considering the impact on cities and the commercial real estate field, changes are to be expected. Former New York Mayor Michael Bloomberg “wants to develop a set of policy recommendations for cities that are just waking up to the driverless revolution,” according to a Washington Post article. “Five cities will serve as testing grounds and early participants in the conversation: Austin, Los Angeles and Nashville … as well as Buenos Aires and Paris. Five additional cities will be named by year’s end.” Noting the importance of leaders and experts to really begin talking about the many possibilities of change to urban development and planning.
In a recent Backchannel article, Robin Chase, co-founder and former CEO of Zipcar, recommended that “cities and countries must actively shape the introduction of autonomous vehicles. We are getting access to this technical marvel at the precise moment when cities are full and bursting from the urbanizing of our planet, when we absolutely need to transition rapidly from fossil fuels, and when it is imperative to improve people’s access to opportunity: jobs, education, health services. We have the ability to eliminate congestion, transform the livability of cities, make it possible to travel quickly and safely from A to B for the price of a bus ticket, improve the quality of our air, and make a significant dent in reducing CO2 emissions.” The very landscape of cities will change, he insists: “On-street and almost all off-street parking, including parking garages, will be unnecessary and we’ll get rid of them. Communities and local governments can come up with criteria and priorities for how to repurpose that newly available public space: wider sidewalks, more street trees and plantings, bike lanes, street furniture. Progressive cities will make use of old parking lots, garages, and gas stations to fix what was lacking: affordable housing, green space, grocery stores, schools. Proactive cities will know their priorities neighborhood by neighborhood, as well as their criteria for action, before the transition begins.”
Alternative perspectives on self-driving cars can be found in another Wired article, which presents the visions of eight urban planners and futurists, offering various forecasts on how they will transform cities and the buildings within them. Parking lots, parking spaces and garages could be converted to other uses. Some garage operators have already begun to create strategy around repositioning properties for retail, public use or possibly housing. Lisa Futing, project manager for the Audi Urban Futures Initiative, said the “’biggest change to the urban fabric will be to parking infrastructure,’” and notes that future parking facilities “’will be able to accommodate 60 percent more cars thanks to smaller driving lanes, greater maneuverability, and a lack of need for stairs and elevators.”
Self-driving trucks have also been in the news lately, and will clearly have an impact on industrial real estate in the near future. Uber, through their the subsidiary Otto, also had the first revenue-generating load transported by an autonomous truck on October 20th. A driver, in the cab to monitor the trip and take over in case of emergency, only took over control when going on and off of ramps. “In the first real-world commercial use of autonomous trucking, some 45,000 cans of Budweiser beer arrived … at a warehouse after traveling over 120 highway miles in a self-driving truck,” a Reuters article reports.
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