How self-driving cars will transform real estate by Jackson Hills
Autonomous vehicles are set to become one of the most practical gizmos we’ve come up with since the internet.
That being said, we need to prepare.
Since the very beginning, transport has defined real estate. It’s an ironclad rule of thumb that anywhere a road goes, property prices soar. It makes sense. Goods need to be transported in and out of wherever it is we want to call home to stop us starving or dying from curable diseases.
So how will self-driving cars affect the real estate industry?
Changes to urban and suburban areas
Cities are some of the best places to live in terms of location. They are where the jobs are. Suburban real estate, on the other hand, is definitely preferable if you’re looking for a little more peace and quiet or, more importantly, if you want to save money.
This is all well and good, except a huge number of suburbanites still work in the city where the majority of jobs are. To save on rent, you need to pay in travel time.
This results in traffic jams and more cars in the city than houses (and thus the need for added parking areas), and gives commercial radio stations more time alone with your ears to defile them with Justin Bieber.
But what if travel wasn’t ‘lost’ time anymore? What if it could be used for recreation, socialising, eating, sleeping or work?
As the burden of travel is lessened, it makes sense that people would be far more likely to agree to longer commutes, expanding the urban sprawl even further.
But the great exodus from the city won’t just mean a boom in suburban residential real estate. Opening up the opportunity for more residential real estate means opening up the opportunity for more commercial real estate on the outskirts of the city.
The city will remain the great, overarching hub, but self-driving cars are sure to gentrify the outskirts tremendously.
Less parking and added ROI for property developers
You won’t have to own your own driverless car to reap the many benefits. The ability to summon cheap, reliable transport at a whim (provided you’re not travelling too far) is likely to convince ownership-shy Millennials to not bother buying a car at all.
A fleet of autonomous Ubers are already on the streets of Pittsburgh, with CEO Travis Kalanick projecting that Uber’s entire fleet will be driverless by 2030. Likewise, Ford has also announced their plans for “fully automated, driverless vehicles for commercial ride-sharing” by 2021.
We’re also likely to see public transport automated in due time. With automation comes efficiency, and with efficiency comes savings. Public transport will soon be so cheap and punctual, people will actually want to use it.
Funnily enough, people losing interest in purchasing their own cars is actually good news for property developers. Sub-surface parking in high-rise apartment blocks is notorious for burning though profits –though historically, it’s been an essential part of apartment buildings.
Perhaps not for much longer? Self-driving public transport, automated taxis on an on-demand basis and hipsters’ new obsession for pushbikes with one gear might mean cheaper rent for residents who choose not to own a car, and fatter pockets for property developers.
Less designated parking space in cities
In the central business districts of the US, more than 31 per cent of prime real estate paradise has been paved to put up parking lots. Well, doesn’t it always seem to go that you don’t know what you’ve got till it’s gone? Likewise, roads are currently built twice as wide than they need to be to accommodate parked cars.
Obviously, we’re still going to need places to park cars. While self-driving cars can drive for longer than the average human, they’re not going to prowl the streets forever. They need to refuel somewhere, but 31 per cent seems a little over the top, doesn’t it?
It’s likely the vast majority of the fleet will be ‘nesting’ in recharging ports when not in use, and there’s no need for these to be in the city. They’ll likely be situated on the outskirts of cities, leaving an abundance of car parks unused in urban areas.
What do we do with all this extra space?
Sure, a lot of the privately owned, commercial car parks might be sold off to property developers, increasing population densities in cities further. However, if these are council owned, it’s more likely that we’ll be converting the space into something a little more fun for the taxpayer. Playgrounds, community centres, who knows?
The extra space we have on either side of the road is more likely to be used to ‘green up’ the cities with trees or better bike lanes.
Self-driving trucks and industrial real estate
We’ve looked at cars and public transport, but autonomous vehicles aren’t just about moving people. Uber has just purchased a new start-up Otto, a self-driving truck company. Why? The freight industry is arguably a more profitable market for autonomy.
It’s a trucker’s job to pick up raw materials from the farm, take them to processing plants and factories, and bring the finished goods to your local Kmart. Because truckers need to sleep, we’re required to make these trips as short as viably possible. This means relying on the spoke-hub distribution paradigm – manufacturers supply large regional distributors, which supply local warehouses, shops, and eventually, your home.
But imagine if trucks never had to stop? Industrial properties could afford to be further from shipping ports, cities and farmland, opening up a huge market of previously ‘too impractical to sell industrial’ real estate.
On the other hand, as autonomous trucks get cheaper, industrial properties, factories and warehouses might become smaller and more local as distributors begin delivering goods directly to consumers (think Coles’ and Woolworths’ home delivery programs). Living close to a warehouse could, in a miracle of technological evolution, actually be a selling point.
When will this happen?
Uber already has automated cars on the road (under heavy monitoring). Tesla has released an almost self-driving ‘autopilot’ mode for their model S, which is already on the market. Volvo announced its self-driving car will be available next year. Audi, too, has projected its A8 will be available, and driverless, in a similar time frame.
That being said, this isn’t going to be some overnight, Pompeii-esque shift in the way we live. Sure, as changes of this calibre go, it’s going to be quick – though it’ll take some time for driverless cars to take over, and even longer for our cities to reflect the change.