Autonomous Vehicles - Commercial Real Estate - Class A

Top 3 Impacts of Autonomous Vehicles on Commercial Real Estate

Autonomous vehicles (AV), or self-driving cars, may not be be fully integrated into the thread of our society for several years, but the commercial real estate industry is already feeling the impact thanks to ride and car sharing services such as Uber and Lyft. Real estate developers are beginning to rethink land planning and development in both urban and suburban areas, in order to be prepared to transition as the real estate landscape changes.  Take a look at the top 3 impacts autonomous vehicles will have on commercial real estate and prepare yourself for the future.

Autonomous Vehicles - Commercial Real Estate - Mall

1) The Rise of Hybrid Retail Centers

With the advent of online shopping, traditional retail centers and shopping malls have been on the decline.  In recent years, traditional shopping centers have increasingly become more mixed-used, offering patrons retail, entertainment, and dining options all in one place.  The popularity of these one-stop centers are likely to be accelerated by AV technology. Destination shopping centers may see a rise in patrons, thanks to parking and transportation options becoming easier to manage.  Ride sharing services are already helping to increase the number of patrons visiting shopping centers as patrons no longer have to worry about searching for (and in some cases paying for) parking and dealing with traffic.  

With more people using AV and  ride sharing services, parking lots will become smaller, freeing up usable space for shops and dining options.  This will increase profitability due to reductions in parking lot maintenance and increased revenues from tenants occupying space previously dedicated to parking.  Additionally, retail brands can take advantage of AV technology and utilize their store locations as mini-distribution centers for the delivery of their goods. Commercial properties with additional space will create new opportunities for investment, and narrow the value gap between properties in cities and suburbs.

Autonomous Vehicles - Commercial Real Estate

 2) Class A Office Space

Per zoning laws, Class A office buildings are already designed with ample parking space.    Class A office buildings in Central Business Districts (CBD) tend to be costlier because land in the city tends to be more expensive.  Since most people working in these CBD offices commute to work, ample parking space is needed.  The need for parking results in a significant increase in the amount of money spent on a project.  CBD parking garages usually charge for parking, in order to offset some of the parking expenses. According to a 2017 Transwestern study,  parking revenue currently averages just 10% of CBD office building gross revenue. To account for the money lost from the decrease in demand of parking spaces, CBD office building developers and owners will need to strategically redevelop and monetize the empty space into additional office, retail, or storage space.

Suburban Class A office buildings already offer ample parking.  Traditional suburban office parks will more than likely become mixed-use in nature, creating the sense of being in the city.  Currently, Class A office buildings are being designed to transition into the AV age. The integration of AV technology is already shifting how developers are planning and constructing new developments, such as building offices closer to roadways with parking structures designed to be easily converted to rentable space.  

Autonomous Vehicles - Parking Lots

3) Increased Density

Currently, availability of parking is one of the primary determinants of how dense an office can be populated.  Most suburban office complexes provide 4 parking stalls per each 1,000 square feet. It follows that employers can only have 4 workers per each 1,000 square feet of space they lease.  Since most workers currently drive their own car to work, office spaces can only accommodate as many workers as the parking facilities provide. With the rise in AV technology, workers will no longer be dependent on parking spaces and employers will no longer be constrained by the capacity of the parking facilities.  This increased density should result in increased efficiency and higher productivity.

Every innovation brings new opportunities as well as new challenges.   As the commercial real estate landscape continues to respond to innovations and trends in technology, such as autonomous vehicles, retail and Class A office space will be impacted.   Stay tuned and visit us at or call Bill White at 949-721-8880 if you have any questions.

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