Sooner or later, real estate will have to adapt to this fast-gaining transportation revolution.
As autonomous vehicle (AV) technology rapidly improves, the idea of driverless cars rolling on city streets is turning from fantasy to reality. From Audi to Volvo, almost every major auto manufacturer is investing significant resources into AV research. Many are developing in-house expertise through dedicated R&D groups such as Audi’s Urban Future Initiative and Nissan-Renault’s Future Lab.
So AVs should be on roads any day now, right? Not so fast. The technology may be starting to take shape, but mass adoption probably won’t be happening anytime soon.
Ambitious Plans Meet Reality
Tesla projected that a million self-driving taxis would be on the road by 2020. However, that timeline might not be realistic as technology and safety measures need to be refined. A few early pilot programs are emerging, but these are in highly controlled, extensively mapped “geofenced” areas.
The Brooklyn Navy Yard Development Corporation, for instance, introduced a geofenced AV shuttle service in partnership with the technology company Optimus Ride. Bergstrom Airport, in Austin, Texas, is running a six-month pilot service, with six-person AV shuttles transporting passengers within the airport’s parking garages. AVs will most likely be available as shuttles contained to private campuses, airports and other areas with limited access for at least another decade.
But even if the technology moves out of testing, the densely populated northeastern U.S., for example, probably won’t see AVs take to narrow, winding, snow-covered streets for some time. The timeline increases when factoring in the massive changes needed for current infrastructure and government regulations.
Implications for CRE
Even if AVs are further off than first thought, commercial real estate developers should begin thinking about an AV-filled future. Early adopters who design and build in anticipation of AVs could boost their bottom line.
For example, fully autonomous vehicles will be able to self-park. An implication for garage design includes potentially lower ceilings at car height rather than standing human height. That could mean lower building costs and more compact parking. Overall demand for parking could diminish as fleet-based AVs will pick up and drop off passengers at the curb rather than using garages.
Ever try to hail a shared ride service at a U.S. airport only to find complete chaos at the curb amid a throng of waiting passengers? This is also happening at office buildings and residential towers, and it’s an area where planning, development and design lag the pace of technological adoption.
Over the long term, municipalities can cultivate solutions like wider streets and centralized pick-up or drop-off zones akin to today’s bus stations. But in the short term, developers should think about making interim solutions that accommodate immediate ride-share needs and future AV use.
While rethinking the layout and design of an entire ground floor, including facades and lobbies, may seem like a big investment, their evolution could follow a simultaneous trend: the advent of hospitality-oriented amenities within multifamily and office buildings. There is an opportunity to rethink how the ground levels of commercial real estate properties are used, and how they interface with the street.
The re-envisioned ground floor could feature new spaces where multimodal pick-up and drop-off can occur safely and seamlessly. Like many hotel lobbies today, entrances could become covered, temperature-controlled indoor/outdoor driveways with clearly designated areas for pick-up, drop-off and waiting that coexist with traditional first-floor welcome, information and security desk needs. Electronic message boards with live travel updates interspersed with advertising, food and beverage vendors, lifestyle amenities, fitness facilities and spas could also enhance this service. Imagine how much easier it would be to use a gym membership if parking a car or being outside in the rain or snow were not a factor.
Taking a big-picture view on how to migrate building design toward ride sharing and eventual AV integration may seem risky due to the trade-offs in available rentable space. However, the transition could yield untold payoffs in the perceived service value and ease of building access for the end-user — especially since ride-sharing appears to be here to stay.
‘Streetcar Suburbs’ of the Future
Perhaps the greatest opportunity area for AVs is the elevation and reconnection of outer-ring neighborhoods. These areas of cities are not quite suburban or urban in character, and they typically do not have convenient access to public transportation. Ride sharing has allowed many of these neighborhoods to become more accessible, thereby increasing their desirability. AV integration could amplify this trend.
Shared AVs have the potential to transform car spaces into people spaces in these outer-ring neighborhoods. It helps that in many outer-ring neighborhoods, developers are already building five- or six-story buildings. These building types are ripe for gradual evolution, as the steel-framed ground floor can serve as a parking garage entry if the building’s use turns to above-ground parking, or perhaps retail or pick-up/drop-off zones down the road.
Surface parking in these neighborhoods could transition to green space or other community amenities that only improve the character of these areas. Many cities are already converting parking spaces into delightful and unexpected parklets — a concept that can serve as an inspiration for new types of green spaces in both urban and suburban areas should AVs free up space once dedicated to personal vehicles.
For example, in June, parking lots next to the unused RFK Stadium in Washington, D.C., reopened as The Fields at RFK Campus. It has three soccer fields, an outdoor events venue and a playground.
Development in outer-ring neighborhoods often needs dedicated space for surface or structured parking to address market demands or meet parking requirements. While building parking structures in a way that facilitates conversion to leasable space is one strategy to provide flexibility, conversion will likely be expensive and offer limited configurations. A complementary strategy would be to anticipate the growing demand for shared and micromobility options while minimizing the amount of structured parking. Many cities, eager to reduce reliance on cars, have introduced Transit Demand Management programs. These provide incentives or exemptions in exchange for amenities that support multimodal transportation and discourage car ownership.
Rather than wait for cities to build these amenities in the public realm, developers could benefit by integrating amenities or ground-floor configurations that encourage and accommodate ride-sharing and, eventually, AVs. Just as having a high walk score can be a way to attract tenants, proximity to a mobility hub that provides easy access to bike shares, scooters, ridesharing and fleets of AVs could be a desirable amenity one day.
What Lies Ahead?
The question of how and when AVs will be integrated into our cities and lifestyles is uncertain. Will autonomous cars contribute to an urban dystopia of long-distance commutes through sprawling cities, or a sustainable future where convenient and affordable mobility contributes to the vitality and economic success of cities?
The reality is likely to be somewhere in between, but it will take a collaborative, forward-looking approach between municipalities, developers, urban planners, designers, entrepreneurs and engineers to harness the potential benefits of AVs over time. Developers and investors who take a proactive approach, working with cities to develop new products that respond to new types of mobility, have much to gain as early adopters.