A Message from President Mike Theo: Envisioning Tomorrow Today

 Mike Theo  |    March 08, 2018

I saw a video not long ago of a man running errands. The man was driving his car on a sunny day — maybe a Saturday. He was dressed casually, wore a smart-looking hat and sunglasses, and he was well-spoken. He stopped at several stop signs and traffic lights. He turned right, left, went fast, slowed down as appropriate. Pretty typical running errands kind of stuff. Along the way, he wanted a bite to eat, so he pulled into a drive-thru for a taco. Or maybe it was a burrito? Regardless, he ordered, pulled up to the window, paid the attendant and took his food. All seems so very normal until he pulled into a parking stall to pick up his laundry. As he got out of his car, he unfurled a long white stick with a red tip. You see, the man was blind, and his car was an autonomous vehicle (AV).

This video was part of a presentation by professor David Noyce from the UW-Madison Department of Civil and Environmental Engineering, and the audience was the WRA board of directors. UW-Madison is one of the leading research universities in the world regarding autonomous, or driverless, vehicles, and the WRA directors wanted to learn how this technology could impact the future of real estate markets by reimagining where and how people live, work, recreate, commute and interact, regardless of their age, ethnicity, geography, incomes and, yes, disability. 

Needless to say, this session to envision tomorrow today was a bit disorienting but equally exhilarating. 

Some of the possible impacts are also obvious. As Dr. Noyce revealed, the push for AVs will improve transportation safety; reduce congestion; increase road capacity; reduce fuel demand; increase productivity; reduce parking demand; improve mobility for children, the elderly and the disabled; and eliminate the need for traffic enforcement and even eliminate traffic signage. The impact of each depends on the eventual mix of ownership, licensing or service-based AVs in the future. 

As the WRA directors learned, the impact of this technology — direct and indirect — on real estate is mind-boggling. Consider these AV effects:

  • Every autonomous ridesharing vehicle can replace 10 cars and could reduce urban automobiles by 90 percent. This aspect alone will repurpose existing uses of real estate as well as the desirability of where people want to live. 
  • One of the biggest impacts is the drastically reduced need for parking lots, structures and surface lots, which by some estimates could be cut by up to half over the next three decades. Because the parking scenarios and parking structures for AVs could differ from how we park vehicles today — think “stacking” — the emergence of AVs could free up some 75 billion square feet of space and create “new” land for redevelopment in nearly every corner of America, particularly in urban settings. Approximately one quarter of American cities are currently devoted to parking. 
  • With the average American spending 73 minutes per day in traffic, AVs will not only increase travel efficiency by reducing congestion — the vehicles will constantly be recalibrating routes to avoid what congestion remains. This will make drive times faster and at the same time allow passengers to engage in other, more productive work or other personal tasks.
  • Because families would rarely need multiple AVs, home garages will undergo a major repurposing, from storing cars to storing other personal belongings. It is estimated that 2.5 billion square feet is currently dedicated to self-storage rentals. 
  • AVs could dramatically change the hotel business, as travelers opt not to rest for the night but rather sleep in their cars. Cottages “up north” could benefit from easier travels, particularly the hassles of getting out of town early on summer Fridays.
  • By changing the very concept of drive time, AVs could shift housing demand from urban cores to the suburbs, causing home prices outside downtown areas to rise and conversely put downward prices on rents and values in major urban settings.

These are just some of the possibilities. While full-scale integration of AVs is likely 20 or more years away, builders and developers are already changing their project designs to accommodate a future with driverless cars. These include parking structures with higher ceilings for easier conversion to office space, student housing or low-income apartments. Repurposing existing gas stations into fitness centers and/or playgrounds or fresh food stores are already being contemplated. New master-planned projects in cities like Toronto, Los Angeles, Oslo, San Francisco and Boston are designing expanded curb drop-off areas for passengers and e-commerce deliveries. China is planning complexes with elevated loops for easy drop-off, recharging lots and return pick-up areas.

As the AV technology advances, so too does the public acceptance of its use. A recent study by the National Association of Home Builders found that 59 percent of Americans said they would consider buying a safe/affordable driverless car — 30 percent said yes and 29 percent said maybe. When asked if a driverless car would encourage them to move further away from work, 63 percent of respondents responded in favor — 34 percent said yes and 29 percent said maybe. 

Envisioning tomorrow today was a little disconcerting for our board of directors. But it was inspiring to consider what our industry, broadly defined, will look like in a few short decades. The public and private research is intensifying, and it’s happening in our own backyard. Amazing.

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