(REAL ESTATE WEEKLY) – As alternative forms of transportation like ride-sharing and autonomous vehicles gather steam, experts say adjacent industries like commercial and residential parking are safe, at least for now.
According to Andrea Cross, Americas head of office research for CBRE, even in the face of technology and market disruptors like Uber and Lyft, demand for office tenant parking in particular will remain strong throughout the next five years.
In a survey conducted by CBRE, 75 percent of leasing professionals and office investors said that tenant demand for office parking will remain the same or increase through 2023. Part of the confidence is due to driving’s dominance amongst commuters in the U.S. — an overwhelming 86 percent of U.S. works use a car to commute to work, the report states.
“The reality is that the vast majority of people still commute to work in a car,” said Cross.
Additionally, even despite interest and investment in autonomous vehicles continuing to expand — current players in the race include tech heavyweights like Google and Uber — most experts agree that fully autonomous vehicles are still as far as two decades away.
In a recent comprehensive study by international consultancy PricewaterhouseCoopers which outlines methods of alleviating traffic congestion, the timeline for mass adoption of autonomous vehicles is projected for closer to 2040.
Cross said that in New York City where traffic patterns are more complex and inclement weather is common — snow and ice creates a particular problem for the navigation AI — autonomous vehicles could take even longer to enter the market compared to other cities.
“When you have a market like New York with a lot of pedestrians and bikers, it’s more difficult for vehicles to navigate that environment,” said Cross. “We don’t see autonomous vehicles [in New York] making an impact in the near-term.”
While the short-term projections for office and commercial parking remain stable, more distant outlooks are less certain.
A November report by CBRE predicts that autonomous vehicles stand to “fundamentally reshape” office markets across the country. By 2030 the report states, autonomous vehicles could account for between 11 to 27 percent of all vehicle miles traveled, a bullish estimation on autonomous travel that mirrors an equally confident attitude.
David Eisenberg, senior vice president of Digital Enablement and Technology at CBRE said in a recent report that, “Autonomous vehicles may have the greatest impact on U.S. real estate markets since mass adoption of the car and expansion of the federal highway system.”
According to Cross, particularly in New York where commuters are less reliant on their cars, owners and developers in possession of often large and expensive parking garages and lots, flexibility is advisable.
“From a development perspective it’s a difficult balance, because you have to have meet the needs of today and also look for tomorrow,” said Cross.
Among the strategies for outward looking office owners and developers who are unsure of the long-term future of parking is designing garages that can be adapted for alternate uses after the fact.
Some owners have already begun building garages that are half above grade and half below, allowing them to raze the top half and build for an alternative use — residential or retail — if need be.