Jennifer van der Kleut
The Center for Real Estate Research at Massachusetts Institute of Technology (MIT) released a report this week that has industry analysts and media outlets buzzing. Will a shift toward autonomous vehicles over the next decade or two spur a real estate boom, as garages are leveled to make way for more housing and office buildings, and sidewalks are widened to encourage more walking?
The report, entitled “Real Estate Trends: The Future of Real Estate in the United States,” which was sponsored by Capital One Bank, features research on a number of trends relevant to the advent of the technology and its potential impact on real estate across the nation, including housing affordability and inventory, fluctuations in home values, demographics and more, as well as the current boom taking place in the Internet of Things (IoT) industry.
As industry analysts predict that the advent of autonomous cars will bring about a decline in personal car ownership and a subsequent rise in fleet companies that offer ride-hailing services in driverless cars (which a number of companies are currently working on, including General Motors, Uber and others), they predict it will dramatically change the shape of both urban and suburban landscapes.
With less of a need for parking garages–as, presumably, autonomous fleets will pretty much run rides 24/7–the report predicts many inner-city parking garages will become obsolete, and perhaps actually be demolished to make way for much-needed additional housing.
They also predict sidewalks will be widened; with less of a need for on-street parking, designated “drop-off zones” for autonomous fleet cars will be created instead. Widened sidewalks will encourage more walking by pedestrians who can now live in the increased downtown housing and walk to work or to shopping and restaurants.
“Developers are already starting to target parking structures, gas stations and auto dealerships, betting that they’ll be able to redevelop the sites as car ownership becomes obsolete, said Rick Palacios, director of research at John Burns Real Estate Consulting,” reporters at Bloomberg News quoted this week, in response to the report.
Suburbs won’t go away, though–if they don’t have to fight traffic driving into the city themselves anymore, the MIT report predicts that people will still enjoy living in quieter residential neighborhoods and enjoying a relaxing commute to work every day in an autonomous car, when they can nap, get a jump-start on work or watch TV while their robot taxi keeps an eye on the road.
Rick Palacios authored an article in September that expanded on some of the predictions about how autonomous cars will reshape cities and affect real estate.
He pointed out that increased availability of autonomous ride-hailing would also allow senior citizens and the disabled to age at home longer, which would slow home sales to a certain point, but would then be off-set by the building boom of new housing he mentioned to Bloomberg. In addition, he predicts industries like general contracting and home remodeling may get a boost as people retrofit homes to accommodate seniors and disabled persons living at home longer.
Palacios even suggests that home contracting prices may go down, as transportation costs for shipping materials are reduced. He predicts humans will also enjoy lower personal transportation costs, as hailing robot taxis will cost much less than the regular maintenance and up-keep of owning a car, paying for the insurance on it and filling it with gas (especially if a shift toward autonomous cars also means a shift toward electric cars).