I don’t like driving. Like is probably too kind of a word—I abhor driving. Beyond the everyday nuisances like nonsensical traffic lights and slowpokes, aggressive drivers and those who are seemingly confused—driving is frustrating, and in my mind, a terrifically unproductive and wholly inefficient waste of time. Look, I can appreciate the sense of peace some gain from getting behind the wheel for what has largely become a mindless activity to enjoy the downtime, but given unlimited wealth, the first indulgence for me would be a hiring a chauffer.
So, naturally, I am excited about a future that includes driverless vehicles. It has all the benefits of a chauffer without the small talk. The idea, in some form, has been around since the 1920’s—seriously. But, only recently have companies like Google, along with most major auto manufacturers, made strides into making the concept a reality available to the public. The government is creating guidelines and throwing $4 billion in marketing behind the idea in the hopes it will convince the public the vehicles are safe. The funny thing is—they are, but there is still the issue of trust and control. It’s true, driverless cars have a higher rate of crashes than non-autonomous vehicles, but well, only because of non-autonomous vehicles. In other words—human drivers cause the crashes, not the computers. The reason—the computers operating driverless cars follow the laws and humans largely don’t; people are fairly easily distracted and the same can’t be said of computers.
In addition to saving lives, driverless vehicles save time, save fuel, save money. Still, adoption of the technology by the general public will be a tough sell. The majority of consumers in several studies have rejected the idea of not being in control of their vehicle. However, don’t think for a moment driverless cars won’t reach a point where they are as pervasive as smartphones. The Institute of Electronics and Engineers project that 75% of the vehicles on the road will be driverless by 2040. Google hopes to make its car available by 2018.
Regardless of when mass adoption occurs it will be disruptive. If driverless vehicles prove themselves to be substantially safer, how does auto insurance function? If we are safer and automated to the point speed limits can be increased—do we need airlines? In an environment where cars self park and are available to us again with a tap of a smartphone—do we need as many parking spaces? If we don’t need as many parking spaces—are entire cities reshaped to include new development be it buildings or pocket parks? Do we move closer to population centers or further away? What if the system for shipping products is driverless—do warehouses and retailers shrink because smaller inventory levels are required since product can be moved around the clock without driver fatigue?
In this world, is a supremely visible corner lot still worth $2 million? Does any highly sought after and currently valuable commercial real estate have the same attractiveness in an environment where the benefits of visibility, access, parking, and activity are essentially replaced by search engine optimization or its future equivalent?
Maybe. No matter how much technology we surround ourselves with—we’re still human. And as humans, we are likely to continue craving the same social environment that leads us to retailers and restaurants today. We are still prone to the same planning failures that force us to the convenience store at 11pm (though drones could take this away). We will still longingly look out the window during our commute aching with the need for instant gratification pushing us toward convenient retailers. We still respond to the experience retail can create. Driverless technology would allow those experiences to be quite elaborate. And still, none of these examples guarantee the corner is worth $2 million or the key elements of site selection still matter.
The world is almost certain to be different for most industries, including commercial real estate. Automobiles forced changes to our communities and industries from their introduction. They reshaped and helped create new cities in the 1950’s. Driverless vehicles will cause a more severe disruption—I expect business and communities will respond with the same human creativity, ambition, and adaptability as in the past. I wouldn’t count on utopia, but history suggests we can continue to create something better—even if it is different.
Tim Reamer provides commercial real estate brokerage and consulting services with Cottonwood Commercial and specializes in retail representation, investment property (multifamily | commercial | NNN), and development projects. Learn more at www.timreamer.com.SHARE