Real estate industry veterans seem to be as preoccupied with cars and automobile technology these days as they are with buildings.
An instinct for self-preservation likely has something to do with it. The brave new world where people are freed from the yoke of the steering wheel and cars become rolling lounges and offices is, by many accounts, closer than many realize. That future will dramatically change the shape of urban space and the pace of development across the country, industry experts say.
"What is the one big thing that I think is going to be the most profound disruption in the industry?" Michael Beckerman, founder and CEO of the real estate media outlet The News Funnel, said at the International Council of Shopping Centers' New York Deal Making conference this week. "I would tell you it's going to be driverless cars."
Beckerman said the technology sooner or later will touch every corner of the urban landscape: the size and shape of roads, the amount of parking, the layout of buildings and city blocks. Non-gateway cities like Tampa, Fla., are already preparing for it.
"There are many cities across America that are going to be highly competitive and attractive ... because they get what's happening around urban development as it relates to tech, led by driverless cars and many other things," he said.
At RealInsight's Real Estate Private Equity Summit last week, a student-housing developer in the audience raised concerns about driverless technology during a panel on opportunistic investing. In current and near-term projects, balancing existing parking needs with changing projections of future needs has become a risk-laden "balancing act," he said.
"I've been talking to guys in the Bay area that are at the head of the autonomous vehicle revolution. Their think tanks told my partner and I that they think this will be the largest real estate land grab in ... history. ... You look across the country, where [real estate] is built around the automobile. Every Home Depot and Costco, every office building in suburbia, every doctor's office and hospital. There is a sea of parking across the United States of America that becomes obsolete, potentially," the developer said.
Panelist Peter Lewis, chairman and president of Wharton Equity Partners, said many parking garages will eventually be turned into storage units.
"It's happening quickly, but I don't know how quickly it's going to happen, as far as an investment horizon [goes]," Lewis said. "This is tricky stuff to be dealing with, but it's coming."
Another panelist, Joe Tansey, chief investment officer for Garrison Investment, said parking lots could present a "huge opportunity," insofar as a purchase of a box retailer would come with a large land bank on which a limited-service hotel or apartment building could be constructed.
In an interview at the ICSC conference, Garrick Brown, vice president of retail research at Cushman & Wakefield, predicted a second wave of suburban sprawl alongside the mass adoption of driverless cars, as commute time becomes less of a hang-up for citizens.
"Two hours in a car isn't two hours in a car anymore," he said. "It's two hours in your office. It's two hours watching SportsCenter."
He said the country's floundering suburban malls likely will be made over as mixed-use centers, with boutique hotels, medical office space, apartments, clicks-to-bricks retail and other "experiential" concepts.
"It gives an opportunity to replay the [suburban mall] space as urban feel/suburban location," Brown said of the driverless car. "Which is going to be really desirable for young millennial families that wanted an urban lifestyle but were priced out of the cities. ... This is going to be how these malls find new life."