The road ahead: driverless cars
The introduction of driverless cars is likely to change many aspects of our lives. On an individual level, non drivers, such as the elderly, adolescents, and the disabled, might be able to use cars independently and those who currently endure a commute by car will have this time freed up to do something else while travelling.
It is predicted that communication between smart vehicles will optimise traffic flows while minimising congestion and collisions.
Tech companies are working to make driverless cars a commercial reality sooner rather than later. In its recent forecast, analytics specialist IHS Markit suggests that global autonomous car sales will reach 600,000 by 2025.
But how will the driverless car revolution affect commercial property?
Over the last century, innovation in automotive technology has had a significant impact on the sector.
The introduction of cars certainly allowed huge demographic shifts while the subsequent mid-century motorway systems connected cities, creating real estate development opportunities across all property types.
Historically, property fortunes have been made by correctly anticipating and reacting to major advances in transportation, including automotive, rail and air.
The evolving future of mobility has the potential to change both the use and the supply and demand dynamics for commercial real estate, and those engaged in the sector should be taking note.
One obvious change might be to out-of-town retail centres.
Marie Hickey, director in the commercial research team at Savills says: “If driverless cars become mainstream the most immediate impact could be a significant drop in demand for car parking space at out-of-town retail schemes.
“If you can get your car to drop you off, return itself home, or to another location, and collect you when summoned, there’ll be no need to have car parking in the immediate vicinity.”
She believes this could potentially enable landlords to transform former parking spaces for alternative uses, such as additional retail and leisure space or residential development.
“But there could be challenges too,” Hickey says. “Many consumers choose out-of-town retail parks because of the ease of getting there and the availability of free or cheap car parking compared to high street or city centre locations.
“With driverless cars potentially removing this advantage, as it will be just as easy for your car to drop you in a town centre, out-of-town landlords will need to reassess what makes their schemes an attractive place to shop.”
Many are already embracing this approach by enhancing the food and beverage offering to give consumers an experience beyond simply shopping.
Driverless cars could also be an opportunity to create new income streams. Electric vehicles require charging and landlords could establish their out-of-town retail schemes as local charging hubs.
Hickey says future-proofing such as this is already uppermost in many clients’ plans.
“Many of the retail parks and shopping centres Savills manages have already decided to explore [these options] and we are currently working with POD Point, the UK’s leading provider of charge points for electric and hybrid cars, to promote electric vehicle charging across all our UK sites.”
However, she does warn that as the technology is still evolving, it is important not to commit too early to one type.
In cities, this removal of the need for parking spaces might have even more profound effects.
As well as redevelopment potential for existing car parks, with kerbside parking becoming unnecessary, space could open up in the most densely packed and high-value areas either for further retail uses or as green spaces.
Mark Charlton, head of research at Colliers International sees implications for companies and local authorities who rely on income from parking.
He says: “Owners of airports are already seeing a fall in revenue from car parks as in many cities in particular it is more cost effective for people to rely on services such as Uber, than to own a car.
“If more of us are dropped off at airports, or hospitals for example, then that revenue stream may be lost.
“Because autonomous cars are less likely to be owned by individuals, as they can just be summoned by an app when needed, this trend is only likely to continue.”
Meanwhile the technology which is behind the development of driverless cars is changing the shape and use of warehouses.
Wheeled robots have already taken over handling goods inside many distribution centres.
If driverless delivery vehicles become commonplace on our roads, it makes sense that the standardisation of them extends in and outside the building.
Warehouses built to suit may not have the same design, or indeed location, as existing stock.
Hickey says: “Given it is a question of not whether driverless cars will appear on British roads, but when, this is a good time to consider the potential positives, plus the challenges, of this new generation of vehicles, to avoid expensive re-purposing in future.”
This article appears in the AUTUMN 2017 edition of Vision Scotland. An online version is available here.