Real estate enters a new age
Jack Sidders and Jess Shankleman examine the impact on property of a driverless future.
The link between property and transport has been perhaps one of the most durable in human history. Since the ancients, few things have delivered higher land values with more certainty than advances in transport, from roads to canals, railways to highways.
It’s still ‘‘a no-brainer’’ in the 21st century, says Bridget Buxton, who in 2016 bought a fixer-upper in a scruffy part of east London because it’s a short walk to a highspeed cross-town rail line.
Prices are up 90 per cent in the past five years for homes like hers, far outpacing the whole city.
Now the dawn of the driverless car, which promises a utopia of stress-free commutes, urban playgrounds and the end of parking hassles, threatens to complicate the calculus for anyone buying property.
‘‘Real estate might be the industry that is most transformed by autonomous vehicles,’’ said David Silver, who teaches selfdriving engineering at Udacity, an online university.
‘‘It could change real estate from a business that is all about location, location, location.’’
It may take a while. The earliest examples of driverless servicesbuses, taxis and delivery vans-have already arrived, but widespread consumer adoption might not be here for a decade.
Almost half a century passed from Henry Ford’s 1908 Model T, the first car for the masses, before suburbs designed for drivers took hold.
And that’s why investors like Ric Clark, chairman of Brookfield Property Partners LP, the world’s largest real estate investment company, admit they’re involved in little more than guesswork.
They’re just starting to think about what to do with all the space that could be freed up in a world where cars no longer sit idle for an estimated 95 per cent of the time; whether unloved areas without mass transit might soon become more attractive; whether out-ofthe-way greenfield sites will become valuable locations for warehouses.
Among Brookfield’s US$152 billion (NZ$209b) in real-estate assets are about 175 malls in the US where ‘‘the biggest physical acreage is surface parking lots or structured parking,’’ Clark said.
‘‘For years we have seen this stuff and thought we would love to build apartments or maybe if there is a higher and better use, we could build on it.’’
Just as fracking upended the oil industry by giving new life to old fields, so the driverless future offers to free up whole new neighbourhoods.
In New York City, parking covers an area equivalent to two Central Parks, according to estimates published by Moovel Lab, a Stuttgart-based research unit of Daimler.
London would gain space equal to almost five Hyde Parks without its car-parking spaces.
Then again, the disruption offers blessed relief to the working world’s most harried peoplecommuters – foretelling a new era of sprawl by encouraging development of outlying areas.
Truckers’ adoption of selfdriving vehicles could also have a big impact on industrial land values, according to Bill Page, at Legal & General Group Plc’s investment-management unit.
‘‘In the US, an entire network of truck stops, motels and gas stations could fall in value if vehicles no longer need drivers.’’
‘‘We need to be around it,’’ added Tim Mooney, global head of real estate at money manager Varde Partners.
- The Washington Post