Tech buses provide a clue to how driverless cars may alter the future of office real estate

16-May-2019

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Traveling to offices as far as Stockton or Napa could become the new normal for some Bay Area commuters, as driverless cars inch closer to reality.

Commercial real estate firm CBRE released a report earlier this month connecting the dots between the billions of dollars in venture capital pouring into autonomous vehicles and what the industry’s adoption will mean for office real estate. The report predicts that by 2030, AVs could account for between 11 and 27 percent of vehicle-miles traveled in the U.S.

“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,” David Eisenberg, senior vice president at CBRE said in a statement. Eisenberg points to the ripple effects in mobility, and in turn office markets, already experienced from the ride-sharing industry, which accounts for just 2 percent of miles traveled.

The researchers analyzed more than 12,000 lease transactions in three undisclosed metro areas, taking into account factors including proximity to talent and commercial centers, walkability and quality of office. The study found that once AVs hit the roads in large volumes, longer commutes will not be a limiting factor for companies looking for office space because employees can be more productive while in transit — working or even napping.

“Here in the Bay Area, we have a really good idea of what it will look like: tech shuttles,” said Andrea Cross, one of the report’s authors and Americas Head of Office Research at CBRE. “People will tolerate longer commutes and that will alter where offices can be located.”

Some employees of companies like Google endure a two- to four-hour daily commute, traveling via private company shuttles from San Francisco or even the East Bay down to Mountain View, Cross pointed out. All the while, the tech workers can be shooting off emails or wrapping up presentations. Going forward, employers looking to expand their office footprints may look to cities located in the outer extremes of the Bay Area off public transit lines, such as Stockton to the East and Napa to the North, instead of competing for sky-high office rents in San Francisco proper, she said.

Commutes are already lengthening across the region, with the bulk of workers driving alone. Between 2013 and 2016, the average travel time to work in the San Francisco and Oakland metro areas increased by over 8 percent, up to 32 minutes, according to the Census American Community Survey 5-year Estimates.

As geographical location becomes less critical in snapping up office real estate, the report gives landlords and companies a piece of advice: “Focus on creating the most attractive building and work environment possible.”

“What’s going to matter is the office itself and the surrounding area because there will be a greater number of options,” Cross said, as the war for talent in the Bay Area further heightens.

At the same time, the walkability of cities will become more critical as well as enticing, as parking structures are replaced by parks and “last mile” options like electric scooters eliminate the need for cars in urban centers. According to the report, “locations on the periphery of walkable areas” will experience development growth as commuters are willing to travel a bit further.

CBRE senior vice president Laura Sagues added that the effects of driverless cars “will be felt across nearly all property types and sectors, from retail, industrial, healthcare and hospitality, to insurance markets and subsequent capital flows.”

https://www.bizjournals.com/sanfrancisco/news/2018/12/07/autonomous-vehicles-office-real-estate-cbre.html

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