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Driverless Vehicles Are Coming – And They’re Coming Fast

By Jeff Green, Managing Director, Global Occupier Services and Neil Gorman, EMEA Partner, Global Occupier Services

driverless cars

Imagine a world where a driverless vehicle delivers you from your front door to your office every morning. No driving, no parking, and no hassle required. You can work, eat breakfast, read a book, watch television – or even sleep – during your commute.

Sound too good to be true? Well, thanks to modern technology, driverless vehicles are coming – and they’re coming fast. Estimates vary as to when they will dominate the landscape, but many experts believe they will be a major presence on U.S. roads by 2025.

In fact, several automakers, including Volvo, Mercedes-Benz, Volkswagen/ Audi, Tesla, and BMW, are already well on their way toward making the driver’s role less important. Elon Musk, co-founder and CEO of Tesla, is planning a coast-to-coast demo drive in November or December 2017, from California to New York, with no controls touched at any point during the entire journey. Tesla has also announced that its customers would be able to summon a car across the country by 2018. General Motors is now testing its self-driving Bolt in Arizona, and BMW and Nissan have joined Mercedes-Benz in announcing plans to offer cars with self-driving capabilities by 2020.

With so much growth and change on the horizon, this technology is sure to have major implications across the board, including on corporations. Although the technology is still a work in progress, it’s never too early to start thinking about the impacts the new technology will have on the workplace.

It’s no wonder these companies are all jumping on the driverless technology band wagon. Last year, Goldman Sachs projected the market for advanced driver assistance systems and driverless vehicles would grow from about $3 billion in 2015 to $96 billion in 2025 and $290 billion in 2035.

Driverless Vehicles Are Expected To:

Increase employee productivity.

According to McKinsey & Company, we’ll all have an extra 50 minutes per day for work or relaxing because we won’t have to drive ourselves to or from work. This equates to productivity gains of $507 billion annually in the U.S. where Americans spend some 75 billion hours a year driving, according to the Morgan Stanley article “Autonomous Cars: The Future is Now.” Whether drafting documents or conducting a video conference, driverless vehicles will enable employees to conduct business seamlessly to and from work – all while on the move. This increased productivity is sure to have a profoundly positive impact on corporations’ bottom lines, both in the short and long term. And when
not actively working during the commute, employees can enjoy some much needed down time, which can ultimately reduce the level of overall stress.

Free up space.

Now, imagine that after working (or binge watching your favorite show) during your entire commute, you were then able to be dropped off right at your office’s door, heading right into your morning meeting instead of wasting time parking (and potentially walking several
blocks to your office). Upon dropping you off, your car could simply park itself either around the corner or in a free lot miles away. Or, in a world where Transportation-as-a-Service (TAAS) – think Uber or Lyft – is the new norm, the vehicle you took to work just keeps going, moving from passenger to passenger, stopping only to refuel or for repairs. With a reduced or eliminated need for parking, developers and owners are freed up to use current parking structures and lots in whole new ways – be it housing, retail, healthcare, urban farms, or parks. In fact, some experts predict that driverless vehicles will have erased
the need for up to 90% of our current parking lots 15 years from now. To quantify that impact, just consider that the European Parking Association estimates there are nearly 250 million parking spaces across Europe and a study conducted by researchers at UC Berkeley estimated the count in the U.S. is potentially three times higher. Now that’s a lot of land that will need to be repurposed.

For those buildings that plan to keep parking within their structures, the automation of driverless cars will allow more cars to be parked in less space. In fact, according to McKinsey & Company, we’ll have 61 billion extra square feet of parking space, partly because driverless vehicles will park consistently and closer together than they do now. Some architecture firms and developers are already changing the way they create new buildings that accommodate for current parking needs, but have the flexibility to easily transition if parking demand drops dramatically. One example of this is creating parking decks with flat floors (instead of the typical slanted design) and putting the ramps on the outside of the structure. At a later date this design will allow for easier transition to other uses. In addition to the change in parking, the ingress / egress infrastructure of buildings may need to be modified to accommodate occupants’ mass use of driverless vehicles. Envision a building with less parking and much larger pickup and drop-off sections. And, what parking does exist will likely need to accommodate car charging as electronic vehicle (EV) technology is likely to become more prevalent.

Whether constructing new commercial real estate with reduced parking or revamping an older building’s parking garage into modern office space, driverless vehicles will ultimately alter the demand for parking, freeing up space in and around existing commercial real estate. This will offer myriad challenges and opportunities for owners and occupiers.

Provide more location flexibility.

When it comes to driverless vehicles, the old saying, “location, location, location” takes on
a diminished meaning. Sure, location will always matter, but driverless transportation has the power to reduce the stresses of a daily commute and provide opportunities for commute time to be used more productively. Both of these factors will make it increasingly less important to live close to the office for some employees. This may increase the demand for housing, and with it supporting retail, in the exurbs of cities as the distance from ones work can be increased with a lesser impact on one’s quality of life. Companies can open offices more easily in less expensive secondary markets and draw from a larger talent pool as location becomes less critical. The relationship with public transportation may also change as immediate proximity is also not as important since driverless cars are
plentiful and can easily and cost effectively get people from the train or bus to their final destination. Industrial real estate users – manufacturers, fulfillment centers, and warehouses – will also see changes from the advent of driverless technology. Just as the advent of new energy sources allowed for mills to move away from rivers, an abundance of low-cost, unmanned vehicles will open up manufacturers to less costly areas less reliant on air and sea ports or train lines. The reduced and/or eliminated labor costs associated with moving materials will allow for companies to take advantage of lower real estate costs that come with less convenient locations. This will, of course, dramatically impact the trucking
industry as driverless vehicles are able to carry freight 24/7 with reduced labor involvement. In fact, Reuters reported recently that Tesla is developing a long-haul, all electric semi-truck with autonomous driving capabilities that moves in “platoons” and automatically follow the direction of the lead vehicle.

The above is an excerpt from the Fifth Edition of the Occupier Edge. To learn more about the impact driverless vehicles will have on the workplace and our world, download the full report here.

 

 Jeffrey Green is a Managing Director for the Global Occupier Services and Leader of the Automotive Specialty Practice Group.  He is a Global Real Estate professional with 28 years of experience specializing in representing multi national corporations in all areas of real estate across all geographies. Primarily focusing on strategic planning, asset acquisition/disposition, lease negotiations, financial analysis, strategic occupancy planning, and portfolio management.

 

Neil Gorman is a Partner at Cushman & Wakefield for the EMEA region in the Global Occupier Services group. 

 

 

 

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