By: Conrad Brown
Imagine one day getting into your car, entering an address into the navigation system, and taking a nap as the automobile drives you to your destination. Once the vehicle drops you off, it finds parking or roams the streets until you are ready to be picked up again.
Autonomous vehicles (AVs) are automobiles which can drive and operate themselves without any human involvement, and they are a nascent technology throughout the world. Recently, it is becoming more and more conceivable to imagine nations full of AVs, with car companies such as Tesla, Mercedes, Ford, and BMW already having implemented self driving technologies into commercially available automobiles. The AV market is expected to grow greatly throughout the next few decades, as electric AVs provide significant societal benefitssuch as enhanced road safety, lower commute times, and reduced air pollution. With AV sales expected to outnumber those of human operated cars by 2050, it is interesting and important to consider how the widespread use of AVs will affect other enterprises.
The real estate industry will be substantially influenced by the proliferation of AVs, as transportation is fundamentally intertwined with the accessibility and profitability of different structures. AV expansion could feasibly have an unfavorable impact on real estate values, as spaces previously used for parking could be developed into new supply. Current zoning laws in the U.S. include oftentimes extreme minimum parking requirements, with America’s totalparking supply covering more ground than Delaware and Rhode Island combined. However, AVs would diminish the demand for conveniently located parking, as cars could drop off commuters and park in distant lots, or even circle the block until the rider is ready to be picked up. As a result, on site parking at office and apartment buildings or retail centers could be redeveloped for other uses, increasing the overall supply of real estate and potentially decreasing property values.
AV advancement could also reduce the significance of public transportation valuation premiums, also lessening real estate prices. Currently, buildings located close to public transit are considered more valuable because they are easily accessible at low costs to larger populations of people. However, AVs are expected to decrease travel expenses, commute time, and need for parking, all of which could diminish the prominence of existing public transportation infrastructure. Yet, the gravity of these effects may be less pronounced in densely populated cities with expansive transit networks, as space constraints could limit the efficiency of AVs in comparison to public transportation. Nonetheless, by strongly competing with existing systems of public transportation, AVs could begin to challenge the notion that adjacency to transit hubs amplifies property values.
With AVs likely decreasing both the need for accessible parking and the importance of public transit, it will be interesting to see how zoning codes and property values will be affected as AVs become increasingly prevalent in the forthcoming years. Although it is difficult to predict with certainty how properties will be affected, it is almost undeniable that the spread of AVs could significantly affect existing fundamental features of the real estate industry.