You stroll out of your house in the countryside, hop into the self-driving car you ordered and settle in with your coffee and your laptop, not worrying about the fact that it will take you an hour or more to get to work. Though it sounds futuristic, this scenario could become a reality within the next decade.
This increasing dependence on autonomous vehicles could effect all kinds of change, from allowing commuters to travel longer distances to work without as much inconvenience to causing a sea change within the housing market. Fewer cars on the roads could mean that parking lots and other structures are converted into multifamily properties, creating much-needed additional, and more affordable, housing in urban areas.
Despite some of the negative publicity self-driving cars have generated since their limited introduction – especially surrounding a couple of tragic fatal accidents – human error is far more likely to cause an accident than an autonomous vehicle. In fact, 94 percent of accidents are caused by human error and 30,000 people die in accidents each year in the U.S. alone, a number which could be dramatically reduced through the use of driverless cars.
Believing the need for autonomous cars to be inevitable, major auto manufacturers such as BMW and Volvo, as well as tech giants Google and Apple, have all invested in the self-driving car idea. Uber is already testing self-driving trucks to move goods across Arizona, and is planning to roll out a fleet of driverless cars. In addition, California’s governor has given his blessing to the testing of autonomous vehicles. Obviously, there are numerous technical and infrastructure issues to work through before the driverless roadway becomes a reality, including extensive testing and alterations to such things as signs and traffic lights.
There would also presumably be major real estate implications of the adoption of driverless cars. Since people would ride share and not have to own vehicles, the need for parking garages, which can take up a lot of space in urban areas, would decline. This space could then be converted to multifamily use – which is in short supply in certain cities. In New York City alone, parking takes up the equivalent of two Central Parks. You can also imagine fewer auto dealerships and gas stations, freeing up additional space for families.
Google’s parent company, Alphabet, Inc., is even creating a neighborhood in Toronto that could be the first driverless urban environment. Sidewalk Labs, a division of Alphabet, believes the fundamental design and experience of a city could be transformed to be safer, pedestrian-ruled and denser in population, since space in buildings would not need to be allocated for parking vehicles.
Another shift would be the value and appeal of living near a major transit hub. Urban employees wouldn’t have to consider their commute as much when making a real estate decision, so while the conversion of parking space to multifamily housing could increase urban density, there could also be a move to live further away from your workplace. Driverless cars could ease congestion and travel time, meaning fewer car purchases and, perhaps, less need for public transportation, another factor that could change real estate values.
Senior living would also be impacted, as older people who can’t drive themselves could still maintain households with autonomous vehicles. People with disabilities such as blindness or those who use a wheelchair would also be able to have autonomy that currently seems a world away. Rather than turning over, properties belonging to seniors could be renovated to accommodate their needs.
Construction costs could also be reduced, since a major expense in the industry is moving materials. Logistics would be transformed if delivery trucks don’t require drivers. This could impact home values. Conversely, however, there is also the idea that garages could be converted to other uses if households own fewer cars, and this could add to a home’s value. Additionally, parking is a major cost and consideration when multifamily housing units are being planned and approved, a cost which could be eliminated or reduced as parking needs decrease.
In real estate, the adage is always location, location, location. The idea that driverless cars could change that by changing commutes and increasing urban housing is possible. However, other predictions, like the one about the internet fundamentally changing housing since it would increase the ability to communicate globally and work remotely, have largely been proven false. In fact, despite these advances, most decision-making still takes place face to face. Still, driverless cars could get people to their meetings with less inconvenience no matter where they live.
Moving to a future where people don’t own cars may be hard to imagine, but many experts believe a transportation revolution is coming, and real estate may be the industry most affected by these advances. Though there are many possibilities for shifts in the workforce, population relocation and an increase in multifamily properties in dense areas where they are much needed, the laws and the technology will have to reach a certain point for this to occur.
About the author
Michael Zaransky is the founder and managing partner of MZ Capital Partners, a Northbrook, Ill.-based real estate investment firm specializing in the multifamily assets throughout the U.S. Michael, a licensed broker since 1979, is a member of the Young Presidents’ Organization (YPO-Gold), the NationalApartment Association, the National Multifamily Housing Council, and the Urban Land Institute.