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Driverless Cars to Transform Real Estate Landscape

Driverless cars may seem like a novelty to many of us, but almost two dozen companies are racing to get them on the road in the next few years. It’s still a stretch of the imagination to visualize them as a common mode of transportation but if and when that happens, what other changes will that bring? Many people are speculating that autonomous cars will have a big impact on real estate, and how we live our lives.

Business Insider published a ranking of the 18 companies most likely to get those cars on the road first. The one in the lead could make you feel a little nostalgic. Back in 1908, Ford’s Model T became the first mass-produced automobile for the buying public. And now, the Detroit-based automaker is leading the pack with plans to produce a fleet of driverless vehicles for the ride-sharing public by 2021.

Navigant Research is the company that did the ranking. It based the analysis on several criteria including: goals or “vision,” go-to-market strategy, technology, production plans, product quality and reliability, past performance, partners, and ability to stay in the game. The companies that ranked behind Ford as the top ten front runners are GM, Renault-Nissan, Daimler, Volkswagen, BMW, Waymo, Volvo, Delphi, and Hyundai.

But as companies work to gain the lead, we’re bound to see some companies lagging while others are gaining, producing vastly different results than we see right now. And, that’s also true of how this new mode of transportation will likely affect other parts of society, our economy, and our precious real estate.

The “Wow” Factor

Recode just did an interesting piece on how autonomous driving will change “everything” and will come with a huge “wow” factor.

Here’s an excerpt from the article:

“Imagine what it must have felt like to be in a major urban center like New York or Boston in the early 1900s when, in a sea of horses and humans, the first automobile ‘putt-putted’ past.

“Now imagine, if you will, four people standing nearby, with four different reactions to that event: The first ‘Wow, I want to get one of those!’ The second, ‘Wow, that looks scary.’ The third, ‘Wow, I want to build my own car company and make one too.’ And lastly, ‘That thing is going to need a place to get gas.’”

Recode goes on to say that people at places like Stanford and MIT have been toying with autonomous cars for decades. But, it says, there could come a point when people suddenly realize they are not just an experiment and are suddenly taken again by that “wow” factor.

Impacts of the Driverless Car

It won’t just be the driverless car that is twisting our current reality, although some of the changes will be directly related. Futurism posted a blog on how driverless vehicles will transform our cities and, for that matter, our lives.

For starters, the driverless car is supposed to increase safety on the road, and will likely gain popularity hand-in-hand with ride-sharing companies. As more and more people opt for Uber, instead of a private car in the garage, we could see fewer cars on the road, less traffic congestion, and cleaner air due to the use of electric-powered driverless shared vehicles. That will also conserve non-renewable energy by reducing the need for fossil fuels.

If fewer people own their own cars, there would be less need for parking lots, although we’d still need some amount of parking. Self-driving cars would need a place to park when someone isn’t hailing them, and they’d need a place to “charge up,” so parking spaces would be equipped with charging stations.

City planners would need to adapt traffic flow patterns for the use of driverless cars, and buildings would need to accommodate door-to-door service, possibly with more turnouts for cars to pick people up and drop them off. Parking meters may become obsolete along with curbside parking spaces, for that matter.

There are many parking garages in urban areas that could be converted to other uses, although older garages with ramps might not be easily adapted because many of those buildings have floors that are built at an incline. A lot of our newer garages are being designed with flat floors and ramps on the outside of the building. That architectural style will be more easily repurposed in the future, by removing those outside ramps and fixing up the inside.

Driverless Cars & Urban Sprawl

One big impact on real estate is the potential for driverless cars to increase urban sprawl. People could live farther away from cities, and their jobs, and start work on their computers the second they hop into a driverless car. That would essentially eliminate commute time, even though they live much farther away. That could increase property values in more remote locations.

And if people don’t own their own driverless cars, they won’t need garage space for parking. That could change the way developments are planned, or create work for contractors who remodel older homes.

Seniors may benefit greatly from this technology. If they don’t have to worry about driving, it could allow those who want to “age in place” to remain in their homes. That would give them more independence. It could also reduce the demand for senior living facilities and affect home sales because fewer seniors would be putting their homes on the market. On the other hand, they may decide to remodel their homes which would pump money into the construction industry.

The Futurism article says, the use of these cars could also depress property values in some locations. If people move to more desirable suburban locations, valuations could drop for properties in less desirable city centers.

There’s another big negative. Whenever there’s a paradigm shift like this, people will lose jobs. In this case, cab drivers and truck drivers would take a big hit, especially if we see driverless big rigs! Yikes. Cities might not need as many police officers for traffic control, which could mean job loss or the transfer of officers to departments that are understaffed and overworked.

The change in traffic behavior could be a big negative for city revenue however. Bloomberg writes that last year, the 25 biggest U.S. cities generated $5 billion from parking citations, and other vehicle infractions.

When Will This Happen?

There’s no exact timeline for the full integration of this technology into our daily lives but Recode writes that it will probably happen more quickly than we expect because of the merging of three major trends.

The first is computer “vision.” It says that machine learning makes it possible for computers to distinguish various objects on the road.

Second is the birth of the sharing economy. More and more people are embracing “ride sharing” as a viable mode of day-to-day transportation. As with any new technology, it’s more expensive at the beginning. Ride sharing will help get the technology into more lives without the individual expense.

Third is the electrification of vehicles. They are cheaper to maintain, more energy efficient and better for the environment. Fleets of electric vehicles may also be easier to sell to local governments that are worried about traffic and air pollution.

These cars are already on the road in some places, on an experimental basis. Uber is using them in Pittsburgh, for example. But the cars also have safety drivers as a back-up. So, the big question may be — when will the safety drivers go away?

Recode says it will probably be awhile before the safety drivers disappear, but at some point, driverless technology will move quickly into our lives in an almost seamless manner. That’s because we are seeing them first as fleet vehicles for companies like Uber. Consumers are not directly involved yet. Private car ownership is still the paradigm but that could change as the driverless car concept merges with the ride-sharing trend.

The important part of this sweeping transition is to keep an open mind, and think ahead. It looks like we will be seeing this change in our lifetimes!

To listen to this podcast dated November 4, 2017 click here.


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