There is a cultural revolution emerging on the horizon and its approaching much faster than anyone has been anticipating. Driverless cars will dramatically reshape the commercial real estate landscape in the coming years. There are billions of dollars by large corporations and venture capitalists that are being poured into the technology. Companies like Uber, Google, and Apple have been partnering with automakers to accelerate the process. Early in 2016 in order “to accelerate the development and adoption of safe vehicle automation through real-world pilot projects” the U.S. Department of Transportation announced a 10-year, $3.9 billion investment.
Exact estimates greatly vary depending on the source but there is a general consensus that driverless cars will dominate the landscape as soon as 2025. If this were to happen, businesses would rapidly change to accommodate the new transportation. Gunnar Branson, CEO of the National Association of Real Estate Investment Managers stated, “change takes a really long time until it doesn’t. When the shift happens, it’s going to happen very quickly. Sometime change defies our human attempt to control it.”
So where exactly will this change take place? “The biggest change will occur in the multifamily, retail and office sectors,” according to Keith Knutsson of Integrale Advisors. As a result, different criteria will be used to appraise property values appropriately. “Urban planning, zoning, and building codes will drive the impact of driverless vehicles,” says Tim Bothen, CCIM, owner of Bothencharles Real Estate Group, LLC. In addition, there is a population trend of seventy million people annually relocating to urban areas, which will require more efficient means of transportation
This naturally raises questions about what will be the case with the urban-suburban dynamic. Predictions indicate living further away from the city would be more desirable as individuals could be more productive and less stressed. On the other hand, however, prior parking related spaces could make city dwelling more attractive as driverless cars could drive down cost of living in cities. Unfortunately, there is no simple binary response and the effects will vary depending on the environment.