When autonomous vehicles arrive on the streets, they promise to allow passengers to work, relax and even sleep as they travel. But as the very concept of driving changes, it’ll have important implications for the way people commute and, in turn, for the way the office market works.
Indeed, a new report from real estate firm CBRE has found that autonomous vehicles (AVs) are expected to fundamentally reshape the US office market by 2030, by disrupting the way people travel to work.
"The impact of AVs will be felt across nearly all property types and sectors"
The traditional decision-drivers for commercial real estate – geographic location and access to talent – may decrease in importance, while the importance placed on the workplace experience and building amenities grows, says CBRE.
The firm has calculated that autonomous vehicles could account for between 11 and 27% of vehicle miles travelled (VMT) by the year 2030.
Their analysis included factors such as the rate at which the cost-per-mile for autonomous vehicles decreases compared to personal cars, and the time required to develop software able to navigate adverse weather conditions and complex city road layouts.
“Autonomous vehicles may have the greatest impact on U.S. real estate markets since mass adoption of the car and expansion of the federal highway system,” said David Eisenberg, senior vice president, Digital Enablement & Technology, CBRE.
“Ride-sharing services, which currently account for only about two percent of vehicle miles traveled in the U.S., have already had a major impact on transportation patterns, so even the conservative estimate of an 11 percent share of VMT will significantly disrupt employee mobility, and thus impact office markets, by 2030.”
CBRE’s report found that because employees will be able to work, relax or even sleep during their commutes, autonomous vehicles could increase the distance employees are willing to travel for work. This will increase geographic options for employers and create new investment opportunities for landlords in areas not currently served by public transportation, found the research.
If employers have a wider range of location options and employees have more enjoyable commutes, found the report, the need to be near commercial centres and public transport could become less critical for attracting top talent. At the same time, noted CBRE, demand for properties in locations that have “live, work, play” walkability will remain strong.
The report outlines a number of steps that office owners and occupiers can take to prepare for the advent of autonomous vehicles:
Focus on creating the most attractive building and work environment possible
Replace parking lots, garages and on-street parking with amenities and urban retail
Target walkable areas
Consider a broader geographic range of opportunities for office locations or investments
“If AVs render geographic location less of a factor in real estate decision making, the building itself, including its workplace experience and amenities, will increase in importance,” said Andrea Cross, Americas head of office research, CBRE.
While the exact timing for the widespread adoption of autonomous vehicles remains uncertain, said Cross, landlords can start to increase the attractiveness of their buildings through property differentiation.
“The impact of AVs will be felt across nearly all property types and sectors, from retail, industrial, healthcare and hospitality, to insurance markets and subsequent capital flows,” added Laura Sagues, senior vice president, CBRE.