ON THE ROAD APRIL 25, 2017
REVATHI GREENWOOD, AMERICAS HEAD OF INVESTMENT RESEARCH
Source: CBRE Research
Three Pre Conditions
Safety Latency Widespread adoption
Source: CBRE Research
SELF-DRIVING CAR TIMELINE
TECHNOLOGY DEVELOPMENT (2017)
EARLY ADOPTION IN FREIGHT AND GOODS
TRANSPORT
• Limited increase in urban sprawl
• One‐off travel: Suburban retail/entertainment centers
• Daily commute: Move out but limited by Marchetti Constant
• Erosion of non CBD Transit‐Oriented Development (TOD) premiums?
• Explosion in data centers and cybersecurity office demand
LIMITED DRIVER SUBSTITUTION (2025)
Office
Parking % of total building sq. ft. 10 – 15%
Development & Occupancy Cost 10 ‐ 12% of total office construction costs4.5% of total occupancy cost for tenants
[1] Cost of parking spot = $275 per month. Parking ratio of 1 spot per 1,500 sq. ft. Cost for 10,000-sq.-ft. tenant with seven spaces is 2.31/ sq. ft. Average rents in downtown D.C. at $52 per sq. ft. per annum.
2025+: COMPLETE SELF DRIVING CAPABILITY
7
REAL ESTATE | RESIDENTIAL
• One parking space –adds 25% + to development cost per unit
• Reduces unit volume by a quarter
• Household vehicle ownership will drop from 2.1 vehicles to 1.2 vehicles per household (43% decrease) (Source: University of Michigan, 2015)
• Change from two‐car to one‐car or no garages
• Reduces mortgages by 25%‐30%
8
REAL ESTATE | RETAIL
Suburban destination retail centers more accessible
150,000 gas stations/convenience stores obsolete and
suitable for redevelopment National Association of Convenience Stores
Retail parking dwindling
More online retail demand. Affect physical retail space demand
A decade to prepare
Parking layout and economics: Tighter ratios, flexible layout, loading/unloading areas, charging and cleaning stations
Alternative transport options: Car sharing, bikes (storage), transit
CBD DEVELOPMENTS
EXISTING GARAGES
Well located CBD garages leased to AV operators
IMPLICATIONS FOR OFFICE/RETAIL PORTFOLIOS