In its latest report, The New Industry Driver: How the Rise of Autonomous Vehicles Could Impact Future Real Estate Strategy,
Transwestern contends that growing adoption of driverless cars, trucks and warehouse equipment could have a significant economic, operational and cultural effect, impacting every sector of the commercial real estate industry.
“While there are valid concerns about safety, security, government regulation and the potential resistance to give up private cars, the billions of dollars invested by domestic and foreign automakers, countless engineering and design firms, and giant technology conglomerates have made autonomous vehicles a reality,” said Jamie Mahoney, Research Analyst in San Francisco and one of the report’s authors. “While timing of adoption is debatable, a disruptor of this magnitude likely will have implications for office, industrial, retail and healthcare properties and create opportunities to unlock value from real estate.”
One assumption frequently made in relation to autonomous vehicle (AV) technology is that car ownership will decrease as adoption of AVs through ride-sharing services increases. If this trend comes to fruition, the report predicts some notable changes to the urban landscape:
- Traffic congestion would be reduced, freeing up space for other uses, such as pedestrian walkways, retail or restaurants.
- Demand for parking would diminish, causing a re-examination of parking requirements and an opportunity to reposition or redevelop garages, surface lots and underground parking structures.
- Public transit usage would increase, perhaps complementing first and last-mile ridership from transit stations and enabling employers to attract talent from a larger radius.
Adrianna Boursalian, Research Associate in Silicon Valley and co-author of the report, explained that within the office sector, the rise of AVs may add another pawn in the amenities war, especially for Central Business District buildings.
“Features such as curbside pickup and ride-share lobbies could become more prevalent as building tenants and visitors increasingly demand them as next-generation Class A office conveniences,” she said.
Transwestern predicts the industrial sector will see the most disruption from the implementation of AVs, particularly when it comes to increasing efficiencies across warehouse operations, logistics and trucking. Furthermore, AV delivery could solve the “last-mile problem” for many online retailers.
“If AVs can trim time from the fulfillment cycle as consumers are increasingly demanding, we expect more supply chain disruption among e-commerce players of all types,” said Steve Kozarits, Senior Vice President in the industrial services group.
This means location and size of fulfillment centers and distribution buildings may need to be reconsidered as developers increasingly design these buildings with more flexibility, decreased surface parking for warehouse workers, and the ability to take advantage of higher floor-to-area ratio opportunities.
Shopping center owners and developers should also keep an eye on the AV trend, according to the report. A typical suburban mall sits in the center of an expansive parking lot, usually several times the footprint of the mall itself, as it is the least expensive way to accommodate the parking requirements for mall patrons. As with office properties, vast parking areas at malls may no longer be needed. And when all other factors are equal, malls that have larger acreage currently allocated to parking may be more desirable to an investor looking for a redevelopment opportunity.
The full report is available for download at: http://twurls.com/av-report
Transwestern is a privately held real estate firm of collaborative entrepreneurs who deliver a higher level of personalized service – the Transwestern Experience. Specializing in Agency Leasing, Tenant Advisory, Capital Markets, Asset Services and Research, our fully integrated global enterprise adds value for investors, owners and occupiers of all commercial property types. We leverage market insights and operational expertise from members of the Transwestern family of companies specializing in development, real estate investment management and research. Based in Houston, Transwestern has 35 U.S. offices and assists clients through more than 180 offices in 37 countries as part of a strategic alliance with BNP Paribas Real Estate. Experience Extraordinary at transwestern.com and @Transwestern.