Impact of autonomous vehicles on commercial real estate [REPORT]

• Full deployment of fully driverless autonomous vehicles is not likely to happen before 2030-2040 due to a range of factors, including costs of the phasing out of non-autonomous vehicles.
• CAV (Connected Autonomous Vehicles) fleets are likely to be operated in geographically defined areas within the next 5-10 years. This could include filling transit gaps or providing dedicated mobility solutions for large and contained sites such as airports, university campuses and technological parks.
• More cities will adopt Mobility as a Service (MaaS), allowing residents to plan, book and pay for a range of private and public mobility solutions through a single platform.
• AV technology will be adopted more readily for transporting goods rather than people.

“Occupiers in the manufacturing industry are looking to new technology, including autonomous vehicles, to reduce delivery costs and improve overall efficiencies, which is what our clients expect, sector regardless. And as industrial property landlords are realising the need to adapt buildings to changing occupier expectations, BTS schemes are moving up in popularity. Deployment of autonomous vehicles will only add to this trend,” said Joanna Sinkiewicz, Partner, Head of the Industrial Agency, Cushman & Wakefield.

Autonomous vehicles and commercial real estate

The report says that occupiers and investors are willing to pay more for a property meeting their location criteria and providing good connectivity to transport. CAV use could make commuting cheaper and more efficient, thereby reducing the importance of distance that will cease to be a key locational factor. Some studies expect CAV deployment to reduce congestion and increase road capacity.

For cities and locations which thrive on the ability to attract and retain high-skilled talent, high-performing infrastructure, good air quality, and attractive public realm are key to success. Individuals are increasingly aware of the negative impacts of air pollution on physical health, and of long and crowded commutes on mental wellbeing.

Property managers and landlords are likely to apply innovative methods of supporting sustainable transport. For example, if many users or visitors use private hire vehicles, landlords may organise accessible drop-off points.

Short- and long-term challenges

The transition to autonomous driving will pose major challenges to building landlords. It is already necessary to watch closely both innovations having a potential impact on commercial real estate, and legislators responding to new advances and trends. Landlords should plan for the mixed road use combining both AVs and non-AV capable vehicles. AV technology is only one of factors showing how end-user lifestyle and expectations about mobility and environmental quality are changing.

The relative importance of location is likely to reduce in the long run as other factors will begin play a much bigger role in a building’s attractiveness due to improved connectivity to transport. Car-free or reduced-car developments are expected to be favoured going forward in line with sustainability trends and development policies of city authorities. AV technology will also lead to a reduction in car-parking spaces required.

Retail, logistics and warehouses

Deployment of autonomous vehicles is likely to extend shopping centre catchment areas as an improved and faster driving experience will encourage people to travel further. This will also enhance mobility for the disabled and the elderly. Driving and parking costs will fall and a reduction in the number of parking spaces required in city centres will free up lands for other developments. If online retailers can harness AV technology, they will see improved home delivery, leading to an increase in popularity of online retail.

The use of automation in warehouse environments is not new, with many companies using special software applications or systems for sorting goods. These are not fully autonomous robots yet.

AVs will play an important role in logistics within the next five to ten years. Manufacturers, retailers and third party logistics companies are looking to technology to improve efficiencies and reduce delivery costs. CAVs could also be used as lockers on wheels allowing customers to retrieve ordered goods, and have the advantage of reducing labour costs and operating beyond the restrictions of working hours.

Another issue is the use of drones which are able to avoid traffic congestion. The use of drones for delivery is, however, unlikely and could remain a niche solution in urban areas.

Today, the bicycle is the fastest and least expensive means of transport for couriers. Delivery firm UPS is currently working on an electric-powered bike trailer allowing couriers to carry up to 200 kg of parcels.