Autonomous Vehicles: Navigating The Journey, Destination, Impact on CRE

By Cushman & Wakefield’s James Maddock and Kat Hanna

Rapid urbanization, combined with increasing demand for goods and people to be moved in mass and at speed, means that mobility matters more than ever. Logistics companies, mobility platforms, and vehicle Original Equipment Manufacturers (OEMs) are competing to lead the way, and have invested some $80 billion globally in Connected Autonomous Vehicles (CAVs). However, the fast pace of change and the wide range of trends driving investment in AV technology, means identifying some short-term priorities to ensure the sector can meet the changing expectations of occupiers, developers, landlords, and regulators.

The challenge for the CRE sector is to view advances in CAV technology in the broader context of changes to urban density, end-user behavior, and mobility solutions. For some, this may mean simply monitoring the social, technological, economic, environmental, and political landscape to ensure decisions around design, location, and accessibility can adapt to trends. For others, a response to AVs may be shaped around a long-term vision for the sustainability of a development, using AV technology to achieve specific goals around congestion, on-demand transport services, and public realm management.

AVs and their impact on CRE:

– RETHINKING DISTANCE: If widespread CAV use makes commuting either more productive, attractive or simply cheaper, the relative importance of distance reduces, and that of other locational factors like amenities or built environment design increases. It has been argued that this reappraisal of the tradeoff between location and mobility not only makes suburban living relatively more attractive, but could eventually reduce the importance of travel time as a limiting variable in urban planning.

– RETAIL: Assessing the impact of AVs on current retail locations requires an understanding of the existing changes to retail, including the rise of online shopping, and the experience economy. If online retail can harness new AV technology, the economics of home delivery may improve sufficiently to meet the demand for online deliveries.

– LOGISTICS: Urban logistics is expensive – 50% or more of total supply chain costs in Europe – meaning that manufacturers, retailers, and third-party logistics companies are looking to technology to improve efficiencies and reduce costs. One option is for delivery companies to invest in fleets of CAVs to replace delivery vans. Drone delivery is unlikely to have a major impact on the built environment, as their use is likely to remain a niche solution in urban areas. However, drone use in surveying, construction, management, and marketing is on the rise, particularly in the U.S., where one in five drone exemptions has been for real estate purposes.

– PARKING: A reduction in car parking spaces is not necessarily contingent on the deployment of AVs, but could be prompted by improved connectivity, expansion of Mobility as a Service, or a commitment to a “car park free” vision, or simply the ability to get better value from land. Research suggests that a near-complete removal of parking spaces and road space simplification within a new development would gain an estimated 15-20% additional developable area.

For comments, questions or concerns, please contact Dennis Kaiser