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%

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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