Virtual Reality (VR), Drones and other new technology are changing the face, feel and presentation of commercial real estate. From the time of the horse and buggy to present day, each new wave of conveniences has offered changes for CRE.
No one knew there was a real need for a drive thru window at restaurants until the mid-1970’s when it was invented to make life easier. The concept of drive thru took off, consumers embraced it and now we cannot imagine our lives without that convenience. Going forward each new technological advance will continue to bring changes to what is important for commerce and therefore the use of commercial real property.
Virtual Reality made it possible for prospective units and buildings to be viewed and ‘seen’ by a client before it was completely built. Drones made it possible to see the view and ‘feel’ what it will be like to office on the 20th floor in the city. Advances are happening all the time and being able to adapt and reconfigure the use of commercial real property to meet needs will be important to create and preserve value.
Google has had driverless vehicles on the road since 2009 and other companies have followed suit to explore this technology. Apple, General Motors, Ford and many others are now pursuing the driverless technology.
- Google - began in 2009 - more than 2 million miles driven in CA, AZ, TX and Washington state
- Uber - began in 2016 in Pittsburgh
- nuTonomy - running public trials in Singapore and Boston
- Tesla Motors - “Autopilot” software upgrade available for $4,250 on select vehicles
In 1939 at the World’s Fair in New York City General Motor’s presented a Futurama exhibit that predicted: “fine green parkways upon which cars would drive themselves.” Now 80 years later we are finally seeing it come to pass. In 2016, the U.S. Dept. of Transportation announced a $3.9 billion investment over 10 years that will “accelerate the development and adoption of safe vehicle automation through real-world pilot projects.”
Mass transit has been used for decades in New York and other large cities where it is common for residents to use the subway for transportation. Cities will continue to grow with a global surge of 70 million people per year moving to cities. Driverless cars and public transportation will continue to grow and evolve as the need and perspective of millennials create momentum for change.
This population growth will require an increase in commercial real estate for housing, food, entertainment, and shopping. This, along with better transportation will bring change to urban planning, building codes and zoning laws creating opportunities for CRE growth.
Honda is now offering a semi-autonomous Civic for around $20,000. Other driverless vehicles will soon be available with prices dropping to a range that is more affordable. Those who live in the suburbs and commute into the city will be able to do so in a driverless car allowing them to unwind on the drive home.
With more driverless vehicles on the road, the requirement of four-lane highways could become a thing of the past. The ease of traffic will allow for the reuse of land and redevelopment opportunities for commercial real property.
Commuters would have the ability to be dropped off at their place of employment as their car leaves to go park itself and pick them up again at the end of the work day. City parking garages would be redesigned to accommodate vehicles that do not require space for passengers to enter or exit the vehicle, making the spaces smaller with room for more vehicles. This would reduce the need for parking garages allowing for those properties to potentially be redeveloped.
Driverless technology will open doors for many changes in the commercial real estate market. It is important to be flexible and keep an eye on the changing market. Understanding and anticipating consumer needs will continue to be your biggest asset in determining your success in CRE.