The widespread adoption of autonomous vehicles (AVs) will have significant implications for commercial real estate, with impacts on land-use regulations and, in turn, the built environment.
A recent report from the NAIOP Research Foundation, “Preparing for Autonomous Vehicles: A Survey of Local Governments,” by David Dale-Johnson, Ph.D., examines how eight localities in the U.S., Canada and Australia are planning for the arrival of fully automated vehicles and how AVs could affect the commercial real estate industry.
The report finds that much remains uncertain about how soon AVs will be widely available, how they will integrate into existing transportation networks, and the extent to which they will reshape current transportation patterns. Automated vehicles are being tested on city streets, but as of now they require supervision by human drivers. Fully autonomous vehicles that can drive unsupervised to any location in all weather conditions are many years away. Although occupant and pedestrian safety has been a primary motivation for AV development, public concerns about the safety of AVs could slow their adoption. Research into AVs has also supported the development of driver-assistance technologies like automated braking and lane control, which could delay widespread adoption of autonomous vehicles by making human-operated vehicles safer to drive.
The degree to which AVs will affect transportation and urban development patterns will depend on how widely they are adopted and whether they are primarily integrated into shared fleets or owned by individuals. If AVs operated by ride-hailing services or public transit systems displace human-operated vehicles, they could substantially reduce traffic congestion and lead to denser urban development. On the other hand, individually owned AVs could encourage longer commutes and lead to a larger number of vehicles on the road, which would undermine many of their purported benefits for traffic and the environment.
Dale-Johnson interviewed community leaders working in urban transportation from Edmonton, Canada; Arlington County, Virginia; Grand Rapids and Detroit, Michigan; Boston, Massachusetts; Chandler, Arizona; and the state of Victoria, Australia. These interviews reveal that although these localities are in different stages of planning for AVs, most are preparing for their commercial adoption over the next decade.
AVs fit into broader local mobility strategies to improve transportation safety and efficiency. Municipalities currently hosting AV trials seek to improve their safety through local regulations or coordination with AV developers. Several communities are exploring ways to incentivize vehicle-sharing through curb-management strategies and changes to parking requirements. While these policies will affect how AVs are eventually adopted, they also incentivize the current use of traditional ride-hailing and vehicle-sharing services. Some cities are replacing on-street parking with passenger pickup and drop-off zones. Others offer developers the ability to reduce overall parking requirements in exchange for reserving parking spots for ride-sharing services, autonomous vehicles or shared vehicles.
Although AVs continue to evolve and much remains unclear about how they will be adopted, the report identifies several ways that AVs could affect commercial real estate.
Just as ride-hailing services have reduced demand for parking in recent years, AVs should further reduce the need for onsite and curbside parking. While parking demand is expected to decline gradually over several years, in the near-term, developers will still need to build garages that meet current parking requirements. Developers can extend the useful life of new parking structures by avoiding sloped floors and other design features that would inhibit their future conversion to alternative uses.
AV implementation may also encourage the installation of telecommunications infrastructure on commercial buildings. Although most AV developers now focus on designing cars that can operate on existing infrastructure, sensor and signal equipment installed at traffic intersections and on commercial buildings could improve traffic flow and safety. Networking AVs together — allowing them to operate remotely or travel closely together — would also require the deployment of new telecommunications infrastructure such as 5G networks, including antenna systems atop commercial buildings.
AVs will also affect supply chains and demand for industrial buildings. Several states now allow autonomous truck (AT) testing on intercity highways. ATs can currently operate in autonomous mode on highways, but they require human drivers to maneuver on city streets and in warehouse yards. Since human drivers would make ATs more expensive to operate on city streets than highways, experts predict that AT adoption will increase incentives to locate warehouses near major freeways.
While much remains uncertain about the future of autonomous vehicles, their potential to significantly alter the transportation landscape merits continued attention from the commercial real estate industry.
Shawn Moura, Ph.D., is the director of research for NAIOP.