How will self driving vehicles impact on real estate? Translation of an article that appeared in Finance, Slovenia’s daily financial newspaper, on Tuesday 10th April 2018

By Jacqueline Stuart

Autonomous vehicles – now reality

The vision of Ljubljana streets serving self driving vehicles is hard to imagine – but closer than you think.

From Mazda to Maserati, every major car manufacturer is investing in R&D aimed at self-driving cars. But it’s not just carmakers that want your hands off the wheel; there are literally dozens of technology companies investing as well. Will Detroit get there before Silicon Valley?

Google spent at least 1.1bn USD between 2009 and 2015 on autonomous vehicle technology, and aims to be able to commercialise their Waymo self driving car by 2020. It is already being tested by members of the public on the streets of Phoenix, Arizona.

With 45 self driving cars on the roads of California, Apple is now testing more vehicles than its top rivals. Tesla, for instance, has 39 permits. Uber has 29 permits. Google’s Waymo had more than 100 permits in June 2017 and has 24 now.

Tesla had aimed to do a cross-country U.S. drive in one of its vehicles using fully autonomous driving capabilities by the end of last year. Unfortunately they did not achieve that goal, but Elon Musk said last week he anticipates being able to make the trip within three months, or six months at the most.

Automobile companies are investing huge sums into on-demand, autonomous and electric vehicles. General Motors announced a 500m USD investment into the ride service Lyft, with the objective of building a new generation of autonomous taxis. Ford has invested 1bn USD in Argo Al, to create a fully autonomous vehicle for use in predefined areas by 2021. Daimler has a deal with Uber to roll out their self-driving vehicles, with Uber also investing in 24,000 autonomous vehicles from Volvo.

Autonomous vehicles are no longer a dream, but the new reality of transportation. The future has arrived.

Self driving vehicles will change our world

Global real estate advisor Cushman and Wakefield has published a report on self driving vehicles and their impact on commercial real estate.

• They predict that by 2030 to 2040, we will see full deployment of fully driverless vehicles.

• Furthermore driverless fleets are likely to be operated in certain defined areas within the next 5 to 10 years.

• More cities will adopt mobility as a service, allowing residents to plan, book and pay for a range of public and private mobility solutions through a single online platform.

• Automatic vehicle technology will be adopted more rapidly for transporting goods rather than people.

The impact on retail

The evolution of autonomous vehicles coincides with exponential  growth in e-Commerce. Self driving delivery vehicles could provide an improved, more flexible home delivery service.

Shops in town centres will be revitalised thanks to the lower cost of driving and parking, and ease of getting there.

Catchment areas of retail parks will be extended thanks to an improved driving experience and willingness to drive further. People not able to drive, including the disabled and elderly, will have the opportunity to shop in places previously not accessible to them.

A reduction in the number of visitors parking on site will enable the owners of shopping centres to free up land previously used for parking, and redevelop it for residential, or leisure facilities, or additional retail space.

Retailers might collaborate with autonomous vehicle providers to offer free rides as an incentive. A Google division called Intersection is already developing technology that can be used to offer a premium experience for customers arriving at shops in self driving cars. The autonomous vehicle would alert a concierge upon arrival, and the customer would find their favourite drink waiting for them. Customers can expect to find targeted entertainment and marketing inside the cars.

Autonomous vehicles and logistics

Self driving vehicles are expected to play an important role in logistics in the next 5 to 10 years. A large proportion of logistics vehicles spend much of their time operating in predictable environments. Delivery companies are considering how autonomous vehicles could provide ‘lockers on wheels’, enabling the customer to retrieve their goods by entering a code.

Droids are drones that run on the ground and deliver within a 3km radius. They are small pods that operate on pavements at pedestrian speed, and can carry up to 15kg. Droids from London based Starship Technologies have delivered groceries, fast food, laundry and other items in 100 cities, with 100,000km driven to date. For security, the cargo bay is locked throughout the journey, and the droid can be tracked at all times through a smart phone.

Less Parking required

It is hard to predict how much parking will be required in future, but certainly less as car sharing and autonomous vehicles gain popularity. In London, every car in a car sharing scheme takes 17 privately owned vehicles off the road. Carparks could provide valuable redevelopment sites in city centres with little free space. Autonomous vehicles within the next 5 years will certainly provide transport for ‘the last mile’, between park and ride facilities and downtown.

Suburbs will become more attractive

Homes in the suburbs will have more appeal when the daily commute can be a relaxed, enjoyable journey in a self driving car.  Commuting will become more productive, attractive and cheaper. The value of location and proximity to the city centre will change. The trade off between location and mobility will not only make suburban living more attractive, but could reduce the importance of travel time to city planners.

Office implications

Many occupiers are deterred from taking office space in the centre of Ljubljana and other city centres in Slovenia because of the lack of parking space, and the expense of what little parking is available. Others are deterred from taking office space in more attractive, green out of town locations because of the difficulties of reaching other parts of the city for meetings. That would all change with the introduction of fast, reliable and cheap transport round the city. Decisions on location could be made based on what best suits the employees in the company, and what would enhance their lives and make them more productive.

How to prepare for the revolution

A joined up effort will be required to enable Slovenia to take advantage of this new technology. The key stakeholders will be law makers, city planners, developers, and owners of real estate. It is notoriously difficult to get permission for new technology in Slovenia, but the benefits of autonomous vehicles, car sharing, and electric vehicles are too important to jeapordise. It is in everyone’s interests to have fewer cars on the streets of Ljubljana and other cities, and we hope that city planners will ringfence autonomous vehicle zones, provide more electric charging stations and do everything possible to incentivise the existing car sharing provider, and new ones. Developers are often prevented from making the most of city centre sites by the amount of parking spaces required by law. Even a studio apartment requires 1.5 parking spaces. This has to change, or any new development will continue to cause additional congestion on the already overcrowded streets. Residential developer Moda in Manchester UK has partnered with Uber to provide an incentive to residents. In return for foregoing a parking space, they get 110€ per month in credits. Easy in Manchester with its fantastic public transport system, not so easy in Ljubljana with no underground and poorly connected bus routes. Imagine how different the city would be however, with autonomous vehicles to take you wherever you wanted, cheaply and quickly, available with just a few clicks on your smartphone?

Jacqueline Stuart is a Director of S-Invest d.o.o.