NEWS

By Clare Trapasso | Dec 7, 2017

mercedes-benz.com; iStock; realtor.com

The revolution is coming—and it’s driving itself.

As autonomous cars make their autobahn-paced transition from fanciful, emerging technology to mainstream reality, they’re expected to leave a forever-altered world in their rear-view mirrors. And it isn’t just highways and commutes that will be transformed—it’s also the homes and towns where we choose to live.

Minds boggle at this brave, new sci-fi-tinged world lurking around the corner. Imagine being conveyed from your doorstep to your office in a private vehicle, but without the stress of driving in stop-and-go traffic, or making awkward conversation with a driver. Instead, you might take a catnap, binge-watch Netflix, or prep for meetings. Traveling to and from work could even become pleasant. And if a long commute is no longer an ordeal, where might people choose to live?

Chances are folks won’t have to wait long to find out. Many of the big-name automakers, including Ford, Volvo, and BMW, plan to manufacture either fully autonomous vehicles, or ones at least capable of navigating highways on their own, by 2021 or sooner. In 2019, General Motors plans to launch its self-driving vehicles, available for ride-sharing, in some of the nation’s biggest cities, including San Francisco.

Next year, GM will put its newfangled chariots to the ultimate test: on the wildly congested streets of Manhattan. (A human driver will sit behind the wheel to take over in case of an emergency.) Google parent Alphabet’s Waymo will unleash its first fleet of autonomous minivans for trials in the Phoenix area within the next few months. And Tesla CEO Elon Musk said one of his cars will soon make the trip from Los Angeles to New York without a driver ever touching the wheel.

Tesla’s self-driving car technology on displayAndreas Arnold/Bloomberg via Getty Images

As for the everyday ubiquity of the technology—well, that timeline is anyone’s guess. Predictions range from a few years to several decades out, depending on who’s hypothesizing. Many Americans may be hesitant to say goodbye to their beloved clunkers for robotic rides. But automakers and others are betting on the long game.

“It’s a transformative moment,” says Billy Rose, president of The Agency, a Los Angeles–based real estate brokerage and development consultancy. “It’s just so exciting to think about how these changes are going to impact us. There are ways we haven’t even thought of yet.”

Whether the first impact is felt through the private ownership of premium-priced autonomous cars, or robotic ride-hailing services like Lyft, autonomous technology will almost certainly and eventually contribute to a decline in car purchases. And that would have a ripple effect on new home development and community planning.

We’d better buckle up. “We’re on the precipice of a whole new era,” says Rose. “This change will be like the change from horse and buggy to cars.”

NuTonomy’s driverless car, deployed by Lyft in Boston.Where will the next hottest towns and cities be?

So what does all this mean to the future of real estate?

The first areas to see substantial change when self-driving car services take hold will likely be some of the nation’s most desirable—and expensive—urban markets. That’s because a lot of land currently allotted to cars in urban centers—parking lots and garages, gas stations, auto shops, and car washes—could be repurposed into apartment and condo towers, bringing down the cost of housing.

“We’re going to see prime real estate becoming unlocked,” says Rick Palacios Jr., director of research at John Burns Real Estate Consulting.

About 15% to 25% of land in urban centers is currently used for parking, both above and below ground, says Sam Abuelsamid, senior analyst with Navigant Research, a market research company based in Boulder, CO.

Meanwhile, constructing underground parking lots below urban condo and apartment buildings typically runs builders $10,000 to $50,000 a spot, the Agency’s Rose says. Bigger buildings could have more than a hundred spaces. If builders don’t have to shoulder those costs, prices are likely to fall.

A secondary effect of adopting autonomous vehicles could be that farther-out exurbs and rural areas with more affordable, spacious properties could become more attractive to urban workers with the promise of a friction-free commute.

“There are parts of the country that have been left behind, and it’s possible this might bring them back to life,” says Ed McMahon, senior resident fellow at the Urban Land Institute, a Washington, DC–based real estate and land use group.

Still, McMahon is cautious; walkable cities and closer-in suburbs are likely to remain popular, he says. Plus, it may take longer for on-demand driverless car service to become widely available in communities without a critical mass of customers.

Personal garages might just become extinct

Suburban garages could become one of the casualties of robotic rides, going the way of VHS tapes, phone booths, and photographic film. These attached or standalone car shelters could be turned into man caves, gyms, chill out rooms—you name it. They could even be converted into apartments, enabling aging parents or grown children to live nearby, or homeowners to make extra rental income.

International architectural planning firm William Hezmalhalch Architects is already getting ready for the shift by creating prototypes of garages that could easily be converted into living spaces in Orange County, CA. The firm is also looking into designing homes with no garages at all—a radical notion in car-centric Southern California. But they can’t be built just yet. Most local zoning laws currently require each home to have a certain number of parking spots.

The challenge is “getting the jurisdictions to realize there are not going to be as many cars out there,” says Denise Ashton, senior principal in community planning at William Hezmalhalch Architects.

Builders today typically construct garages of about 20 square feet within the shell of suburban homes. That’s about 400 square feet attached to a 2,000- or 2,500-square-foot home made of concrete, walls, and insulation.

None of that comes cheap. Two-car, attached garages usually run from $20,000 to $27,000, according to HomeAdvisor, an online home services marketplace.

But if new homes are built sans garages, that could reduce the overall cost. There could be more land available to put up larger homes in new subdivisions and neighborhoods. Or homes could come with larger yards or more interior space.

Waymo CEO John Krafcik, with Waymo’s self-driving minivan.Horacio Villalobos – Corbis/Getty Images

Stay tuned for the suburbs of the future

The suburban subdivisions of the future are also likely to receive a face-lift—and become a whole lot more green.

If folks no longer own cars, it eliminates the need for driveways and could cut down the number of paved streets throughout communities. Instead, residents might walk or bike down paths—instead of wider, car-centric roads—to catch rides from designated pick-up and drop-off sites. This means far more land could be freed up for park space and other town amenities.

“Today, we need to have streets and driveways for every home,” says Linda Mamet, vice president of corporate marketing at TRI Pointe Group, an Irvine, CA–based homebuilder. “In the future, that may not be the case.”

Of course, many details such as providing access for deliveries and designing walkways in colder climates have yet to be fully figured out.

Car ownership is costly, but many cling to it

But before you start preparing for life in a new, garage-less future, understand this: Americans love their cars. So the path to full autonomous tech acceptance may have a few potholes ahead.

Despite the potential benefits, only about 40% of U.S. adults are currently enthusiastic about the development of autonomous vehicles, compared with 54% who are worried about it, according to a recent Pew Research Center survey.

And don’t be so sure that Americans will embrace the idea of ditching car ownership anytime soon.

“The fact that vehicles become autonomous will not automatically convert people from owning cars to sharing them,” says Blair Schlecter, director of economic development and government affairs at the Beverly Hills Chamber of Commerce, who writes about transportation issues. “Some people will always like the freedom of being able to own their own vehicles and being able to have a style of car they want.”

Moreover, pricey ride-hailing services such as Uber can quickly add up, at current rates. For those who drive about 3,500 miles annually, as about 90% to 95% of Americans with their own cars do, it’s cheaper to buy a vehicle, according to consulting firm McKinsey & Company.

So how will people be persuaded to embrace a self-driving future? They could start by looking at some of the specialized advantages—such as being a major boon for the elderly and disabled, making it easier for them to get around, giving them newfound independence.

Add that to the fact that the average cost of owning a new vehicle totals about $8,469 in 2017, according to AAA. This takes monthly car and insurance payments into account along with gas, maintenance, and repair costs. And these same vehicles sit in their garages and parking spots more than 96% of the year, according to a 2016 AAA survey.

People still LOVE their cars…Chris Ryan/Getty Images

You can already catch a ride in a driverless car…

To players such as Tesla, Uber, Waymo, and the Big Three automakers, it isn’t a matter of whether the autonomous car revolution will be adopted by most Americans—it’s a matter of when, and which companies will lead the charge. That’s why they’re engaged in a frenzied race to develop, perfect, and test these self-driving vehicles and get a wheel up on the competition.

Prescreened Waymo riders can already use an app to hail one of about 600 Chrysler Pacifica Hybrid minivans in Phoenix, where they’re being tested. Once passengers settle into the vehicle, they press a button to start the ride—and they’re off. Riders are shown arrival times on a screen along with what the car is seeing through its cameras and other sensors. There’s also a pull-over button they can press to be let off in a safe place. (As with most current autonomous vehicles, a driver sits in the front seat and can take over if needed.)

Similarly, certain riders in Phoenix, San Francisco, and Pittsburgh can also hail one of Uber’s self-driving Volvos.

BMW, GM, Ford, Land Rover, and many other companies are also testing their technology and vehicles around the country.

Safety issues continue to be a concern, and manufacturers have different ways of addressing it. Tesla’s self-driving cars, for example, are made to be driven by humans but can go fully automated on demand. They are outfitted with 12 sensors and eight cameras to ensure they’re ready. But the company came under fire after one of the owners of the cars died in a crash on a central Florida highway last year after automating about 90% of his last ride. However, government investigators said the victim was warned 13 times audibly and visibly to keep his hands on the steering wheel before the accident.

And a driverless, electric shuttle bus in Las Vegas got into a fender bender within a few hours of its debut recently. A human driver of the other vehicle was deemed at fault, and no one was hurt.

… or live in a community that uses them

Babcock Ranch is using autonomous shuttles throughout the new development. Babcock Ranch

Suburbanites who don’t live in a city can still get in on the autonomous, ride-sharing action. Babcock Ranch is a new 18,000-acre town in Southwest Florida, south of Sarasota. It will have 19,500 homes, schools, services—and autonomous cars and shuttles.

Ground was broken on the former cattle and mining ranch in 2015. About 25 homes—with garages—have already been completed, and residents are beginning to move in. (The town will be a mix of rental apartments, duplexes starting at $175,000, and single-family houses starting in the low $200,000s. It’s one of the first fully solar-powered communities in the country.)

Next month, the community is launching the first of its eight-seat, autonomously driven, electric shuttles operated by a company called Transdev, a supplier of public transportation systems. Babcock’s driverless shuttles travel through the community, from the model homes to the town center to model homes.

“It doesn’t run on tracks. It doesn’t have any wires,” says Babcock spokeswoman Lisa Hall. “It learns the route and … it knows how to guide itself.”

Babcock Ranch says it’s just the beginning of its vision of future travel. The community is also planning to have two-seat, autonomous vehicles that residents can order on their smartphones (for a fee) to get around.

“We’re trying to create a whole new way of living,” Hall says.