Connected and autonomous vehicles will change the way we live, work, shop and play

Rapid urbanisation combined with increasing demand for goods and people to be moved in large numbers and at speed means mobility matters more than ever. Logistics companies, mobility platforms and vehicle original equipment manufacturers (OEMs) are competing to lead the way, and have invested some $80bn (£60bn) globally in connected autonomous vehicles (CAVs). However, the fast pace of change and wide range of trends driving investment in AV technology means identifying some short term priorities to ensure the sector can meet the changing expectations of occupiers, developers, landlords and regulators. 

Rethinking distance

When it comes to real estate and property valuation, location is key. Whether it is proximity to natural resources, similar firms, or simply the right kind of people, occupiers and investors are willing to pay more for a property located where they want to be. Connectivity to transport is no exception – whether this be airport, mass transit or a road network. 

If widespread CAV use makes commuting either more productive, attractive or simply cheaper, the relative importance of distance becomes less significant, and that of other locational factors like amenities or built environment design increases. CAVs could theoretically prompt the reappraisal of the time factor in commuting, meaning that the value of location and proximity to the city centre is potentially adjusted. It has been argued that this reappraisal of the trade-off between location and mobility not only makes suburban living relatively more attractive, but could eventually reduce the importance of travel time as a limiting variable in urban planning. 

Some studies expect CAV deployment to reduce congestion and increase road capacity, particularly once the transition stage is completed and CAVs dominate the road. This reduction in congestion would further accentuate the process of re-evaluation of distance. However, CAV deployment is not guaranteed to reduce congestion, as savings made on stopping distances or parking-induced congestion could be offset by an increase in the number of vehicles on the road due to lower barriers to entry and the potential appeal of time spent in the vehicle as a positive utility. 

Retail

Assessing the impact of AVs on current retail locations requires understanding of not just the shifts in customer behaviour and perceptions of convenience, but existing changes to retail, including the rise of online shopping and the experience economy. An improved and more accessible driving experience is likely to extend catchment areas. This is based on a willingness of people to travel further, and the provision of enhanced mobility for those previously unable to drive, including disabled and elderly people. 

A lower cost of driving and parking may mean the reappraisal of the relative benefits of retail locations. The benefits of improved accessibility, potentially reduced congestion, and decoupling parking from retail locations could benefit centrally located shopping destinations. A reduction in the number of visitors parking on site is likely to lead to a reduction in the amount of parking required. This freeing up of land could offer opportunities for landlords to diversity land use on site, for example by providing additional amenities or selling land for residential development. 

If online retail can harness new AV technology, the economics of home delivery may improve sufficiently to meet demand for online deliveries. Thus, the positive impact of AVs on retail locations will be tempered by the increasing popularity of online retail. AVs can provide a last-mile service connecting retail centres with public transport hubs. While this last-mile provision may be enabled by AVs, it?is not necessary that these last-mile solutions are autonomous, as they could operate on an on-demand, micro-transit basis. 

Retailers could also collaborate?with AV providers to offer AVs as a customer service. A Google division called Intersection is already looking at technology that can be used to offer a premium experience for customers arriving to retail centres using AVs, for example, by alerting a concierge to their arrival and preparing their favourite coffee. It is possible that shopping centre operators or retailers will partner with AV operators to offer premium Mobility as a Service (MaaS), including targeted in-vehicle entertainment and marketing. These services will rely on the collecting and sharing of data about both mobility and consumer habits, and can used by retail park operators as a means of reducing the need for car parking. 

Parking

A reduction in car parking spaces is not necessarily contingent on the deployment of AVs, but could be prompted by improved connectivity, expansion of MaaS, or a commitment to a ‘car park free’ vision, or simply the ability to get better value from land. 

Car parks may be sold or redeveloped for retail, office, or even logistics space – often depending on land values and the initial design of the car park. In 2017, Westfield Europe submitted plans to convert an entire floor of the car park at Westfield Stratford City to retail use based on exceptional demand from retailers for additional space. 

Predictions as to the exact reduction of parking spaces are difficult, as it depends on locations, AV usage and end-user needs. The?fate of existing car parks will depend primarily on ownership, design, management and land values. For example, it is feasible that publicly owned car parks (for example, those held by TfL) are ring-fenced for the development of housing, with set quotas of affordable housing. Such a model has already been proposed by the New York Regional Planning Agency. 

Research suggests that a near complete removal of parking spaces and road space simplification within a new development would gain an estimated 15-20% additional developable area. A reduction in parking is also likely to be viewed positively by planning authorities, and could become a branding or sales point for new developments as ‘AV only’ zones. 

Working out what to do with existing parking is one thing. Understanding the amount of parking needed in the future is more difficult. New developments, both residential and mixed, present an important opportunity to introduce AVs alongside reductions?in parking and road space. Parking space allocation is also likely to reflect target occupier demographics and development location. 

Single land ownership or management makes planning more straightforward and presents an opportunity for developers or landlords to partner with AV fleets to deliver services.

Uncertainty around the impact of AVs on driving behaviour and parking needs leaves cities and developers with a range of options. The challenge for the CRE sector is to view advances in CAV technology in the broader context of changes to urban density, end-user behaviour and mobility solutions. For some,?this may mean simply monitoring? the social, technological, economic, environmental, and political landscape to ensure decisions around design, location and accessibility can adapt to trends. One is to design car parks with adaptability built in, including lightwells and other floors. 

For others in the CRE sector, a response to AVs may be shaped around a long-term vision for the sustainability of a development, using AV technology to achieve specific goals around congestion, on-demand transport services, and public realm management. Whilst it takes courage for developments to go parking free, planning and investment in alternative options, including ridesharing credits and drop-off points, and working with a range of transport providers, may give end-users confidence in a parking free vision. 

Finally, landowners must decide what they want to do with surplus parking, and planning authorities will need to decide how much to intervene with the market. 

The message for the sector as a whole is that while advances in AV technology are not to be ignored, decisions around investment, design and management should place people before vehicle, regardless of who is behind the wheel. 

Predictions

• Full deployment of Level 5 AVs is not likely to happen before 2030-2040. This is due to a range of factors, including the cost, demand for the phasing out of non-AV capable vehicles, and the performance of AV vehicles in terms of safety and performance over the next five years. 
• CAV fleets are likely to be operated in geographically defined areas within the next 5-10 years. This could include filling the gaps in last-mile connectivity left by mass transit or providing a dedicated mobility solution for a large and contained site such as an innovation district, airport, or university campus. Services will be run by private companies, public transport operators or by cross-sector partnerships 
• More cities will adopt MaaS, allowing residents to plan, book  and pay for a range of public and private mobility solutions through a single outline platform. This will favour cities with good levels of existing public transport and open data infrastructure. 
• AV technology will be adopted more rapidly for transporting goods rather than people. The extent and timing of deployment is likely to be strongly influenced by the response of those working in the sector, and the possibility of resistance towards reconfigured roles, redundancy or redeployment.

Recommendations

• Watch the innovators and the legislators: While investment trends may indicate the models of AVs that will be deployed, for example, AV fleets rather than private ownership, government legislation and regulation will impact both on demand and take-up, which is likely to differ based on geography. ?
• Focus on the transition, not just the final outcome: It is easier?to think about an entirely AV?city than it is one with mixed road use, making it difficult to understand how landlords should adapt buildings. Planning for flexibility and adaptability is key to avoiding obsolescence. ?
• Look beyond AVs to how the world of mobility is changing: Interest in AVs is driven?by demographic, political, environmental, and technological factors whose impact is not limited to the question of who ?is behind a vehicle wheel. Landlords, developers, and occupiers need to understand how end-user expectations about mobility, environmental quality, and data are changing.

Long-term considerations?

• Investment Opportunities: Investors and landlords should evaluate opportunities in buying, selling or conversion of car parks. 
• Rethinking Distance: Better commuting means location and accessibility may no longer be everything. Landlords need to think how amenities can make their developments more attractive. 
• Leading the way: Emphasis on sustainability and public realm favours landlords who champion car-free or reduced-car development, both in terms of place branding, maximising developable land, and securing planning permission. 
• Futureproofing design: It may not be right to go car-free yet, but designing new cars with conversion in mind may create value in the future. 

Kat Hanna is an insight associate at Cushman & Wakefield. She is the author of Understanding the impact of autonomous vehicles on commercial real estate. She spoke at Parking & Property 2018.