As self-driving cars hit the road, real estate development may take new direction

The futuristic vision offered by automated vehicles—the freedom to be active during your commute instead of wasting away behind the wheel while stuck in traffic—isn’t quite as utopian a scenario when you run it past cautious and concerned city planners.

Ask Don Elliott, a zoning consultant and director at Clarion Associates in Denver, and he’ll tell you the idea of empty cars congesting city streets and mobile offices zipping around main roads can become downright dystopian.

“I’ve seen the blood run out of people’s faces,” he says when talking about the impact of automated vehicles on transportation, land use, and real estate. “For years, planners have been fighting for a 1 or 2 percent change in transportation mode [getting more people to use transit or bike instead of drive]. With this technology, everything goes out the window. It’s a nightmare.”

The much-hyped transition to autonomous cars, while still years, or even decades, away, according to experts, is an opportunity and challenge that has wide potential to reshape our transportation systems.

But many believe that as city planners, transportation officials, and, eventually, developers start grappling with the changes to come, autonomous vehicles’ potential to reshape real estate, development, and city planning will rival that of the introduction of the automobile. At the American Planning Association’s annual conference earlier this month in New York City, the issue of autonomous vehicles and driverless cars, one admittedly far in the future, was the subject of numerous present-day panels, discussions, and debates.

A recent policy brief by the Institute of Transportation Studies at University of California, Davis, was even more clear. The convergence of three new technologies—automation, electrification, and shared mobility—has the potential to create a whole new wave of automation-induced sprawl without proper planning and regulation.

“This will completely change us as a society,” says Shannon McDonald, an architect, assistant professor at Southern Illinois University-Carbondale, and an expert in future mobility planning. “I think it’ll have the same transformational change as the introduction of the automobile.”

With no real timeline for how or when this technology will roll out, there has been little in the way of planned regulatory response. The federal government released suggested guidance on autonomous vehicles (AVs) last fall, a series of national test sites have begun to look at safety and urban-design issues (as local government officials jockey for the spotlight), and the National Association of City Transportation Officials (NACTO) released a set of policy suggestions in response to the potential impacts of AV.

And, as Elliot noted, there are currently 263 million non-autonomous cars on the road, and roughly 2 billion parking spaces in the United States. While tests, such as the recently announced Waymo trials with families in Phoenix, may have already started, it will take a long time for AV tech to dominate our roadways.

Waymo

But that hasn’t stopped many planning and development experts from thinking about the ways this technology will reshape planning, cities, and, eventually, real estate. As local governments deal with important transportation and land-use issues, the results of these decisions will potentially inflate or depress real estate values and change the way developers operate. Even expected shifts in roadway and traffic design that will be made in the next few decades suggest big shifts will come to future development.

“Streets are 25 to 35 percent of a city’s land area... [the] most valuable asset in many ways,” says Zabe Bent, a principal at transportation consulting firm Nelson\Nygaard and a speaker at the APA conference. “We need to really think about how we manage those spaces for the public good and for reducing congestion.”

The huge potential in parking space

Elliott, the zoning consultant, sees the steady rollout of autonomous-vehicle technology as a catalyst speeding up existing trends. While many technologists may predict a new wave of specialized infrastructure, he believes the future is in the smart repurposing of existing spaces and structures, and policies and zoning codes that support those types of projects.

There’s a tendency to think of new solutions, Elliot says, when the reality is that smart reuse will be key for urban development. Planners will face this shift by using traditional tools—zoning, street design, and traffic regulation—in new ways, which will, in turn, impact how developers operate.

CITE Magazine/SWA Group

He sees two small but significant changes affecting urban real estate development in the age of driverless cars. A reduced need for parking may be the most significant. High-value property in urban areas needs to account for mandatory parking allowances, forcing developers to factor the cost of parking spaces into construction costs and rent.

Elliot gave the example of a 300-square-foot micro-unit studio in a dense downtown area that, due to code requirements, needs two parking spots, meaning the vehicles may end up with more space (324 square feet) than the tenant.

But with the potential for driverless tech to reduce private car ownership, developers won’t need to worry about parking spaces, and can make more money by avoiding wasting space on cars. Elliot sees debates around parking allowances becoming much more important, since it’s a potential tool to create more mixed-use, transit-oriented development and accelerate trends favoring downtown living (and new suburb development that mimics a similar density and walkability).

Arrowstreet Inc.

Some in the real estate world are already planning for this future. In Los Angeles, the mega-developer AvalonBay Communities Inc. has begun work on an apartment development in the city’s arts district with parking garages specifically designed to be convertible, to take advantage of a time in the near future when extra spaces won’t be needed.

Brentwood, a mixed-use development in Nashville, will also be built with a smaller parking-related footprint, and the city of Somerville, Massachusetts is collaborating with Audi’s Urban Future Initiative and the Federal Realty Investment Trust on a garage design that could cut needed parking space by 62 percent. Audi estimates the design could save $100 million once it’s finished.

“Developers will start using the promise of AV and driverless cars to realize net savings,” says Elliott. “It’s not necessarily cheaper, but more space can be used for commercial or residential purposes.”

Real estate firms will negotiate for fewer parking spaces, perhaps even setting up their own agreements with autonomous bus or transportation-network companies, such as Uber or Lyft, to provide tenants with transportation access in exchange for gaining more usable, high-value urban space. Though banks and financial institutions will need to get on board with the concept, this would offer a new way to add density, and could help spur more mixed-use, walkable cities.

The question marks around AVs cut both ways; some, including Elliott, believe AVs could also be tools for sprawl, since commutes will suddenly be more enjoyable and “not everyone can live in funky lofts.”

Street-level shifts

Just as driverless car technology will speed up a change in the way cities think about parking allowances, it’ll also accelerate a shift in how we design roadways, specifically pick-up and drop-off zones for vehicles. The growth in services such as Lyft and Uber are beginning to make this issue clear, but as autonomous vehicles eventually hit the streets, the way buildings and developments welcome and adapt to traffic flow will become increasingly important.

“Our streets aren’t designed for door-to-door service,” says McDonald.

New land-use rules and traffic codes will need to be designed to properly funnel AV traffic and prevent what could be a series of bottlenecks on the road, especially during rush hours, as people get to and from work and school.

Redesigning parking lots and entrances to be less about static parking and more about increasing the flow of dropoffs and pickups, as well as serving as staging areas for driverless cars not in use, will both free up space and ideally protect roadways from potential congestion.

UC Davis researchers believe more research is needed in this field. Instead of focusing on highway situations, automakers and tech companies need to run more simulations with street-level and pedestrian interactions (such as those undertaken at the MCity testing grounds in Michigan) to develop better loading and unloading zones.

MCity

Developments that don’t begin to factor this in may become the sites of frequent traffic jams during peak hours. Allowing Uber and Lyft to take up these spaces for drop-off without creating new regulations is just asking for congestion.

“Curbside loading will become more and more critical,” says Bent. “We need to understand how to manage that curb, since it’ll be important for loading, unloading, cyclists, and transit. It’s an increasingly important place for cities, and we need to learn how to use it better.”

Traffic regulations, even slight shifts to speed limits due to driverless cars, may prove to be important battles over regulation and control. Elliott believes that automakers and tech companies will push hard for state and even federal guidelines for AV to make it easier to program and sell vehicles for a national market.

Local government will need to act decisively to regulate drop-off lanes, speeds, and new parking rules before market forces, and other governments, begin making decisions for them. Technology firms shouldn’t reap the rewards after cities make the investments necessary to adapt to a new transportation reality.

Parking, of course, won’t totally disappear; even the most optimistic, far-reaching prediction for AV adoption suggests we’ll need parking for older, standard vehicles, and staging areas for cars not in use. But the decreasing need for, and importance of, parking will come at a come for cities and municipalities.

Decreasing parking revenues (as well as fines, since AV would be programmed to avoid overstaying a meter or parking during street sweeping) could hit city coffers hard without additional revenue streams. Bent believes that cities will begin to adopt new forms of raising money from transportation, such as user pricing (charging for empty vehicles) or congestion pricing, driving up the cost of moving during peak hours.

AP Photo/Eric Risberg, File

This kind of pricing becomes even more important as a long-term tool to fight sprawl. According to the UC Davis report, as the perceived price of transportation decreases due to automation, it’ll be cheaper for developers to fund projects far from dense urban areas unless municipalities take the lead to incentivize infill development and perhaps even charge for vehicle-miles traveled as a way to make AV commutes less amenable.

Planning for the future

So far, most cities and planning departments haven’t extensively studied the issue and begun to factor it into long-range planning, though that is starting to change. Scott Peterson is the director of technical services for the Metropolitan Planning Organization, a Boston-area regional planning group that released a white paper about autonomous vehicles and city planning.

“These issue came up before, but we couldn’t do them justice during our last plan,” he says. “But now that there’s been more research on safety issues and rollout, we can start factoring it in.”

This recently released white paper places Boston at the forefront of preparing for this big transportation shift. The MPO will begin to run local workshops in October to gauge how area municipalities see this impacting their operations, and will factor autonomous vehicles into long-range planning for their next long-term plan, which comes out in two years.

Peterson sees any impact of autonomous vehicles at least a decade away, and believes that a change won’t happen overnight. But in 20 years, it’ll be a significant topic of conversation, and a majority of vehicles might be using this technology. So it’s definitely time to start looking at the many land-use issues this technology will leave in its wake.

“We really need to update our analytical tools and process to be reflective of this shift,” he says. “Nobody has the definitive answers about this, and how people are going to use this technology, and even their time in their cars.”