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The relationship between real estate and transportation has always been co-dependent. As technology changes transportation – think automated cars and 3D technology, there is no doubt real estate will be impacted. This CCIM Magazine column authored by Dykema Gossett Attorneys William J. Kohler and Ross J. Altman helps us realize the need to stay abreast of trends that could disrupt the way investors assess commercial real estate deals.

The transportation industry stands on the cusp of a remarkable evolution involving the deployment of many technologies that promise to revolutionize how people move about and potentially use land to support those technologies. For example, the increased mobility anticipated by implementing autonomous vehicles creates many possibilities.

Until user patterns and preferences emerge and stabilize, the related effects on commercial real estate development are tough to predict. Nonetheless, the ramifications are potentially dramatic. Three broad real estate trends and their potential changes may reasonably arise from adopting autonomous vehicles.

URBAN DEVELOPMENT: Historically, urban development has followed the location of transportation centers and corridors. Implementing autonomous vehicles, however, could reduce dependency on traditional public transit.

People may possess greater ability to live and work wherever they like. The need for city or commercial centers also might be reduced, causing suburbs and other traditional residential properties to increase in popularity.

Residential areas may be more accessible to work locations with the availability of autonomous vehicles, either used alone or in conjunction with transit. Additionally, with less need for parking, pedestrian areas may increase. Parking lots may turn into infill buildings.

BUILDING DESIGN: Both residential and commercial buildings will dedicate far less space to parking. With less parking required, some developers may elect to simply reduce the size and cost of buildings. Other developers, however, might prefer to increase the amount of space used for other purposes.

Since parking in buildings can be particularly expensive to construct, capital might be reallocated to enhance revenue-generating aspects of a building.

Commercial buildings will need greatly enlarged areas for passenger drop-off and pickup, allowing for orderly entering and exiting during times of high-volume use. Deliveries may occur on a just-in-time basis, changing the loading dock and other support facilities.

INFRASTRUCTURE: The location and nature of parking facilities will necessarily change. Autonomous vehicles need short-term parking spaces between uses, likely in the vicinity of those areas that the vehicle patrols.

Long-term parking also will be needed, but is more likely at satellite locations. Also, extensive smart infrastructure will be required to support the use of autonomous vehicles.

NEW INVESTMENT OPPORTUNITIES: Real estate investors may find opportunities coming from these possibilities. Examples include:

• Ride-hailing fleets may need inventory centers to store driverless cars while they are not in use.
• Both platooning centers and ride-hailing fleets will need service centers for maintenance of their specialized technologies.
• Vehicle testing centers will be needed in more locations than currently planned.

Autonomous vehicles represent a new paradigm in transportation, providing opportunities for commercial real estate development and economic growth. Strategically minded developers, and I may add investors, might start planning now to better understand potential issues pertaining to land use and the built environment. Both current holdings and land speculation should be considered, particularly those near dense urban centers.