Is a Jetsons-style future of driverless cars just around the corner? And what would this radical change mean for parking? A panel at NAIOP’s CRE.Converge 2019 in Los Angeles grappled with these questions, which could have major implications for commercial real estate in the decades ahead.
Some media reports say fully autonomous vehicles (AVs) could be on the road as soon as 2030, but not every expert agrees with that date, according to John Cadenhead, AIA, director of design for Powers Brown Architecture. He said the tipping point comes when all the cars on the road are communicating with each other.
Adaption will occur in stages leading up to that, so there will probably be significant lag time between the first appearance of AVs on roads and a future in which every vehicle is fully autonomous and communicating with other vehicles. What does the commercial real estate industry do between that time and now? Specifically, should it spend capital on structures like parking garages?
According to Steffen Turoff, principal with Walker Consultants, the whole point of parking is to get someone to the front door of a building. AVs change the calculations of that process. They can drop passengers off in front of a property and either park themselves remotely or continue circulating in traffic.
“The unique thing about autonomous vehicles is the destination for the occupant and vehicle are different,” Cadenhead said. “The premium for parking is effectively going away.”
It’s unclear to what degree that will happen, though. Turoff said there’s a strong possibility that parking needs could be reduced 50% within 30 years thanks to AVs.
“That seems like a realistic outlook for real estate investors to consider,” he said. “Existing spaces and demand will likely be reduced, and the greatest impact will be in urban areas.”
As the demand for parking falls, the demand for drop-off areas will increase.
“We’re seeing a lot more focus on the curb,” said Turoff. “Developers want to reduce the use of garages and intensify the use of the curb. The future trend is maximizing use of curb space.”
Additionally, ridesharing services are expected to go fully autonomous as soon as it’s feasible to do so. Property owners could save money by offering financial incentives to occupants instead of building parking structures.
“Instead of charging $100 for a tenant parking space, you could provide an amenity such as cash for using ridesharing,” Cadenhead said. “Spend money that way instead of on a garage with an unsure future.”
He pointed out that the town of Summit, New Jersey, recently started subsidizing rideshare services to avoid building a $10 million parking garage.
The first parking garages appeared about 100 years ago, Cadenhead said. Modern designs have reduced the amount of space per car to about 310 square feet. Automated garages can take that down to 250 square feet per space.
While those are improvements, they don’t address what will happen in the future when AVs become the dominant mode of transportation.
“We’ve looked at how can we make parking more efficient, but haven’t really looked at how to reduce parking and use that space in new ways,” Cadenhead said.
Despite that, real estate developers can begin doing things today to prepare for the AV future.
For example, surface parking is “100% adaptable,” Cadenhead said. With passengers being dropped off in front of buildings, parking spaces can be reduced from 9 feet to 7 feet in width because there won’t be a need to account for humans exiting the AVs.
In garages, levels in existing structures could be used in new ways. Higher floor-to-floor heights could accommodate ductwork and other infrastructure, said panel moderator Juan Dorado, project manager with Dekker/Perich/Sabatini Ltd. However, garages with seven-foot clear heights would make it difficult to add an office or residence.
“Build the best structure you can now, but replace the one that’s 20 to 30 years old,” Turoff said.
While it’s still many years away, the good news for developers is that the rise of AVs and ridesharing could eventually eliminate parking requirements in cities. This could boost densification, which would increase the value of properties, especially in urban areas. Floor area ratios will be positively affected, and developers could build what the market can bear, not what a city dictates.
“Reduction in parking opens up flexibility for development,” Cadenhead said. “It lets the market decide what the ratio for parking should be.”
“A parking requirement is a tax,” Turoff said. “And this is a way to reduce that tax.”