self driving car

Will Self-Driving Cars and COVID Revive Street-Level Lots?

Technology and globalization are impacting urban design in unanticipated ways. How we will travel in the future has changed—not just at a macro, international level, but locally, between home and office. For instance, self-driving ride-sharing vehicles could make parking lots defunct, while electric cars could do the same for gas stations.

At the same time, the COVID-19 pandemic has opened our eyes to the need for safe community spaces. It has also changed the way we work, thanks to empowering technology. The workplaces of the future will need to rise to new challenges.

For commercial real estate (CRE) investors, these are changes to consider sooner rather than later.

What Do Self-Driving Vehicles Mean for City Real Estate?

When Google started its self-driving project in 2009, it was expected to significantly change how we move from point A to point B. Robotic vehicles were meant to be a safer journey where all occupants are free to get on with other things: napping, working, or simply watching the scenery pass by.

But what also quickly became apparent was that technology-driven changes in transport, such as self-driving vehicles, share-riding, and drone deliveries, were set to impact urban landscapes. Consider the following:

  • Curbside parking

With more rides taken in shared vehicles that don’t need to park, much of the space reserved for curbside parking is potentially freed up. Even where people retain a personal vehicle, it can be sent to park itself remotely and called when needed.

  • Street-level lots

For decades, office and retail developers have built their plans around supplying adequate parking for their clients. Now vast parking lots at street level could become superfluous.

  • Pick-up and drop-off zones

What we will need more of are spacious pick-up and drop-off zones. For many buildings in cities like Los Angeles, this will mean designating larger zones in front of lobbies for pick-ups and drop-offs rather than building on top of underground parking garages.

  • Gas stations

Not all self-driving cars are electric, but self-driving taxis will likely “refuel” at depots outside of premium business hubs either way. And with an increasing shift to electric cars in privately owned vehicles, prime urban spots currently occupied by gas stations may be up for redevelopment.

The Pandemic Has Us Thinking Differently about Buildings

We have not yet seen the full effects of self-driving vehicles, but the COVID-19 pandemic is making us rethink urban developments. While some initially predicted the end of traditional office space, studies show that workplaces are crucial for companies. Offices provide things that remote work doesn’t and never will. They facilitate the exchange of ideas between colleagues and help develop the culture many organizations rely on for staff retention.

A more likely outcome of the coronavirus pandemic is increasingly flexible schedules mixing in-person and online remote work. The work that employees come into the office for in the future will have different workspace requirements. Spaces will need to provide what workers miss at home: access to restaurants, retailers, gyms, and services like laundries. At the same time, they want these amenities in areas that aren’t overcrowded and have access to fresh air. These are best provided by spaces on the ground floor, open to streets and squares—the very same spaces that changes in transport make available.

What’s the Value of Street Level Activity?

For most metropolises, the myriad commercial activities that fill the streets are what give them character. Think of Paris without the Champs-Élysées or Beverley Hills without Rodeo Drive. Unfortunately, high-street retail chains and local eateries were the first to suffer in the pandemic. So now, large strips of prime urban real estate still lie deserted.

The World Economic Forum (WEF) has identified street-level lots as having the potential to invigorate post-COVID cities. It sees local authorities as having a vital role to play in relaxing and updating the regulatory frameworks that govern the use of such assets. Further, the WEF suggests using post-pandemic recovery plans to grant public-private partnerships extra agility in revitalizing the streets.

What Should CRE Investors Be Doing?

Given all of the above, investors looking at extending their urban portfolios would do well to consider the following:

  • Plan new construction around flexibility, such as spaces that can be used for multiple purposes or quickly converted. This includes parking garages that many developers are now making standard heights, intending to convert them to office space if they become defunct.
  • Be on the lookout for stimulus packages aimed at revitalizing urban streets.
  • Think innovatively about how space may be used differently in the future, especially when assessing distressed assets.

Featured Image courtesy zombieite | Flickr