Self-Driving Cars is What’s Next for CRE

Last week, I wrote about the first seventeen years of my career in corporate real estate, and at the end of the article, I promised to write about the future.

One of my favorite television characters of all time, The West Wing’s President, Josiah Bartlet, frequently asked his staff, “What’s next?”

While you might think I would write about VTS, Hightower, The News Funnel, RealConnex, LeaseCalcs, or a myriad of other tech tools, I won’t. I could have asked industry insiders like Jonathan Schultz, but I didn’t. They are what’s NOW.

What’s next is a lot harder to predict, so I am going to talk about a major disruption, not only to our industry but to our society as a whole, that’s on the horizon.

Self-driving cars.

According to a recent article by John Greenough for Business Insider, there will be 10 million self driving cars on the road by 2020. As soon as they are safe and reasonably affordable, I will own one. Consider the following:

  • I drive approximately 25,000 miles a year and spend 10 hours a week in my car. What could I accomplish with 10 more hours a week? What couldn’t I accomplish?!?
  • With companies seeking denser work environments, parking is one of the biggest issues impacting suburban office buildings. One of our clients leased 25,000 sf in an adjacent building simply for the parking in order to meet their density needs! Self driving cars will eliminate, or at least minimize, this problem. How so? After my car drops me off at the front door of my building, do I really care where it’s parked?
  • While I know very little about supply chain management, I know that having trucks that can drive themselves means that they can drive all night without stopping to rest. The average age of a commercial truck driver is currently 55 years old. The life expectancy is 61. It seems to me that the shipping/trucking industry will be making large investments to make this happen.
  • In addition to Cadillac, Tesla, Volvo, Mercedes-Benz and Nissan, Google, Uber, and Apple are all investing in this technology and just last week, Toyota announced a $1 billion investment over the next five years. They envision it being a game changer for the elderly and disabled.

While doing research for this post, I read an article on Tech Insider that was published last week claiming that the idea of the self-driving car is already obsolete. The article argues that we will eventually be transported in pods that use magnetic levitation, similar to high speed trains in Japan and China. Two Italian researchers are working on this project, which they call “Next”.

While I don’t see Americans giving up the creature comforts of their luxury cars for pods, which they may or may not own in the future, I do see Uber and other driving services growing in this direction. However, it all leads to more questions:

  • What are cities doing to change their infrastructure to accommodate a new mode of transportation?
  • What do self-driving cars mean for mass transportation?
  • Is this going to help or hurt sprawl?
  • How will parking decks and lots be impacted and/or adaptively reused?
  • Will the cars be individually owned or fleet-run?

Yesterday’s article on TechCrunch titled, How Many American Cities are Preparing For the Arrival of Self-Driving Cars? Not Many hits on a lot of these questions and more.

I started in commercial real estate on November 2, 1998. While no one had heard of it at the time, Google was founded just two months earlier. There were no iPods, let alone iPhones, and you still needed a VCR if you wanted to “tape” a show. In many ways, life is unrecognizable.

How else will life be unrecognizable in seventeen years from now? I don’t know, but as always, I am excited for “what’s next”.

What do you think is on the horizon?