If you’re not planning for how autonomous vehicles are going to impact your business, now’s the time. Disruption and transformation of cities will be enormous. It’s not going to happen immediately – the disruption comes as driverless cars are on the road at the same time as traditional vehicles being controlled by humans. Complete adoption is likely not for another 30 years.
Wes Guckert, PTP, CEO of The Traffic Group, walked 500+ members of the National Forums through what we can expect as autonomous vehicles disrupt our businesses, roads and lives:
- Demand for transit-oriented development may reduce – since they’re not driving, workers won’t need to live close to work to have shorter commutes.
- Demand for suburban residences could increase – bolstered by the expectation of better schools and perceived safety in the suburbs.
- The loss of municipal revenue for eliminated fees associated with traffic violations and DUIs will be huge – what will replace that revenue?
- Will there be a better use of roads without requiring a widening of the road? Lanes can be narrower for self-driving cars, so roads can increase capacity without the need for physically widening roads.
Consider this: There are 256 million cars registered in the United States, and roads and parking areas consume 40 percent of urban land areas. Statistics show that there are at least four parking spots for every car in the U.S. – adding up to 1 billion parking spaces. If parking demand is reduced by 50 percent, 75 billion square feet of space is now available. Will this deflate land values?
Parking garage design is a big deal. Garages now have 8- to 10-foot clear heights, and today’s developers are increasing it to 17- to 18-feet clear heights with the expectation of repurposing garages in the future. Westfield Shopping Centers are doing this, as are Avalon multifamily properties – both know that they are going to have the opportunity to repurpose that space into some other economic use (apartments, retail, health club). They know they don’t want the space to sit empty as parking demand grows smaller. Parking space width will shrink to 7 to 7.5 feet, down from 9 to 10 feet – that’s a 20 percent land savings.
The result is that the cost of urban construction could drop by up to 20 percent – providing opportunity for commercial real estate. How can developers capitalize on the asset of more land space?
Retail will have to make adjustments, particularly mall and shopping areas that will need great space for ride-sharing drop-off and pick-up areas. Westfield is expected to triple or quadruple drop-off spaces at their retail properties. Industrial is running out of room for much-needed expansion – urban warehouses in the U.S. have less available space as demand rises and land values soar.
In closing, Guckert emphasized that decisions about parking will have great ramifications in terms of how we use land, and CRE doesn’t want to be caught in a changing world. Joking about a similar industry that was swept away by changing demand, he said, “Uber yourself before you get Kodaked.”