Uber and Google self-driving cars are taking over Tempe, but don’t be surprised when Arizona becomes the testing ground for autonomous cars and possibly trucks. But why Arizona, why not rivals San Francisco who is known for tech or Pittsburgh who is leading the charge in robotics or Detroit the heart of automotive manufacturing? The answer… decreased regulations, great weather, grid system roadways and affordability; this is what sets Arizona a part from the rest.
Uber isn’t the only company to recognize Arizona’s value to the car business. Ford tests vehicles at Wittman, GM tests all its vehicles in Yuma and has an innovation center in Chandler and Lucid Motors – a Tesla rival – is raising money to build a $700 million factory in Casa Grande. Now, the next phase in the future of the cars is here and Arizona is in the passenger seat.
So what does the future look like? With the implementation of self-driving cars our day-to-day lives, economy and city structure could change drastically. Last year, Goldman Sachs projected the market for advanced driver assistance systems and autonomous vehicles would grow from about $3 billion in 2015 to $96 billion in 2025 and $290 billion in 2035. Intel, and Strategy Analytics, just released a new study predicting driverless car technology could generate $800 billion in economic impact by 2035 and $7 trillion by 2050. In terms of commercial real estate, we could see the following:
- Retail: Every retailer will be able to deliver or offer curbside pick-up. Instead of running out to pick up pizza for dinner or picking up diapers from the 24-hour pharmacy in the middle of the night, people will send their cars. Valet parking will be replaced by the car being able to find the best parking in the area or the owner can send it home with the push of a button.
- Offices: Offices will continue to be located near desirable areas, where sought-after workers want to live. However, with the accessibility for the disabled we may see a rise in job candidates since they no longer will need to rely on services to transport them to work. Offices will have to move past minimum ADA compliance and ensure a positive environment for those with disabilities.
- Industrial: Smaller warehouses will be located near population centers for quick deliveries in small numbers. Larger, robot served “mothership”, warehouses will be located on the outskirts of cities near highways to be served by autonomous trucks driving at night when roads are less busy, resulting in less gas or electricity.
- Medical Office: If tens of thousands of fewer healthy people die in car accidents each year, then the market for synthetic organs will rise. Arizona currently has a synthetic heart company in Tucson, Arizona.
- Land: Land that is further out will grow in value because commute times will be less important, as you could start working from the car and, because, of the lack of human errors, self-driving cars may be permitted to drive faster.
- Parking Ratios: Parking ratios will continue to be important because cars will continue to be a necessity in Phoenix. People in suburban cities won’t adopt cars as a service but may have a self-driving car of their own. Increased mobility for disabled or elderly Americans could increase the number of handicapped parking spots. Parking will remain at a premium.
Ronan McNulty is a Senior Research Analyst at Cushman & Wakefield for the Phoenix office.