How Driverless Cars Could Impact CRE

There is significant buzz around the impact of driverless cars on commercial real estate. This auto transition is said to present both development opportunities as well as challenges for existing properties.

Parking

The largest impact of driverless cars will be the reduction in demand for parking. Fully autonomous cars allow for passengers to be dropped off and therefore for the vehicle to continue to pick up other passengers or park themselves in distant areas. This will create opportunities for existing properties with any surplus parking, as it can be converted to productive uses like retail or residential expansion. However, the parking demand will present challenges to parking lots in downtown areas. As less cars are parked, the demand for expensive parking in downtown could dramatically fall.

Mixed-Use Retail

As the need for parking declines, the trend for mixed-use developments will likely increase. Little need for parking translates to an increased likelihood of heavier foot traffic. Because visitors can be dropped off directly to their destination, they have more opportunity to explore. The establishments also do not have to plan around direct access from the street for parking which allows buildings to be located closer to each other; this subsequently increases pedestrian traffic between neighborhood developments.

Hotels

One industry likely to see challenges is hospitality. An entire network of hotels and motels have been built near highway exchanges to accommodate travelers. Driverless cars, however, allow travelers more opportunity to rest which translates into a decreased demand for somewhere to stay. To replace this drop in numbers, hotels will need to find other ways to draw travelers. One solution may be dining options, as travelers are still in need of a place to eat!