Autonomous Vehicles Could Reshape Office Market–Soon
Autonomous vehicles could fundamentally reshape the U.S. office market within 15 years, commercial real estate analysts say.
Most significantly, geographic location and access to talent–both primary commercial real estate decision drivers–may become less important while building amenities become more important, said CBRE, Los Angeles. The firm’s Autonomous Vehicles –Driving Change for Real Estate report predicted autonomous vehicles could account for between 11 and 27 percent of vehicle miles traveled by 2030.
David Eisenberg, Senior Vice President of Digital Enablement and Technology with CBRE, said autonomous vehicles “may have the greatest impact on U.S. real estate markets since mass adoption of the car and expansion of the federal highway system.” He noted ride-sharing services currently account for only two percent of vehicle miles traveled but have already had a major effect on transportation patterns, “so even a conservative estimate of an 11 percent share of vehicle miles traveled [for autonomous vehicles] will significantly disrupt employee mobility, and thus impact office markets, by 2030.”
Cushman & Wakefield, New York, and CoreNet Global, Atlanta, also predicted autonomous vehicle technology will fundamentally change commercial real estate. “One obvious impact will be the lessening importance of parking around the office space,” the two firms said in a joint report, Autonomous Vehicles’ CRE Impact. “However, certain factors will continue to be extremely important. For example, over 90 percent of respondents indicate they will be equally or more focused on rents costs and the proximity of their office space to neighborhood amenities.”
Cushman and CoreNet surveyed 500 commercial real estate executives for their opinions on AVs. Most respondents said AV technology will not affect the quantity of office space most companies will require. But one-fifth of CRE executives surveyed said they believe they will need less space because of AV technology. Another 25 percent of Cushman/CoreNet respondents said they expect to have a difficult time repurposing parking facilities in their portfolio if those facilities become obsolete due to AV technology implementation.
By enabling employees to work, relax or sleep during their commutes, autonomous vehicles could increase the distance office-using employees are willing to travel to the office, giving occupiers a wider range of geographic options when considering office locations, CBRE said. “This could create new investment opportunities for landlords in areas that are not currently accessible via public transportation,” the report said.
If occupiers have more location options and employees find autonomous vehicles create a nicer commute than public transportation, proximity to commercial centers and public transit could become less critical to attracting top talent, CBRE said.
“If AVs render geographic location less of a factor in real estate decision making, the building itself, including its workplace experience and amenities, will increase in importance,” said CBRE Americas Head of Office Research Andrea Cross. “Occupiers already find highly amenitized buildings appealing, and while the exact timing for widespread adoption of autonomous vehicles remains uncertain, property differentiation is one element that landlords can control that will increase their buildings’ attractiveness now and in the future.”
