The mass adoption of driverless vehicles and the growing use of ride-hailing services means that many real estate assets are likely to be mispriced today, says a new report.
The research by Green Street Advisors and the Urban Land Institute – The Transportation Revolution: The Impact of Ride-Hailing and Driverless Vehicles on Real Estate – found that the advent of driverless vehicles and growth in ride-hailing services will see vehicle ownership decline and cause a dramatic reduction in parking needs. But the impact on real estate of this ‘transportation revolution’ doesn’t yet show up in underwriting, believe the authors.
Dave Bragg, Managing Director at Green Street Advisors, said that the shift could eliminate as much as 75 billion square feet of parking spaces. In places with poor prospects for redevelopment, that surge of newly available land should negatively impact values, found the research.
The shift is likely to support high-quality malls with opportunities for additional retail uses, found the research, while posing a threat to the self-storage sector as residential garage space is converted for use as home storage.
Billboards are also forecast to suffer from the rise in driverless vehicles, as commuters shift their attention from the road to working or being entertained in their vehicles.
“At the sector level, high-quality infill malls with densification opportunities should be the greatest beneficiaries,” said Bragg. “Implications are likely unfavorable for self-storage, billboards, transit-oriented residential, and commoditized retail.”