Could Self-Driving Cars Change the Laws of Real Estate Valuation?
The eternal law of real estate valuation – location, location, location – could be drastically upset by the promise of automated driverless transportation, reports Bloomberg. Without commuting and parking hassles, the fundamental laws of how real estate is valued could be changed.
Access to transport changing
“Real estate might be the industry that is most transformed by autonomous vehicles,” said David Silver, a self-driving engineering teacher for Udacity, Inc., an online university catering to more than 100,000 students interested in driverless transportation. “It could change real estate from a business that is all about location, location, location.”
The article reports that access to transportation is still a real estate “no-brainer.” In London, England, Bridget Buxton told the news outlet she purchased a fixer-upper in a “scruffy” part of east London in 2016, because it was near a high-speed crosstown rail line expected to open this year. Values in the area are said to be up 90 percent over just five years, far outpacing the citywide average.
Change coming to industrial real estate
The article claims that valuation changes could come relatively quickly for industrial real estate. It gives the example of the United Kingdom’s “Golden Triangle,” a centrally located zone just east of Birmingham. This area is ideal for warehousing and logistics facilities, as truckers can reach most every area of the country, even as far away as Edinburgh, Scotland, within the country’s nine-hour driving shift limit.
This has made industrial real estate within the Golden Triangle particularly valuable. However, self-driving trucks could upend the market in the UK as well as in the U.S. “In the U.S., an entire network of truck stops, motels, and gas stations could fall in value if vehicles no longer need drivers,” said Bill Page, a business space research manager for Legal & General Group Plc.
Two Central Parks of parking
Parking is another issue that could be transformed. The article reports that parking in New York City covers an area equivalent to two Central Parks. In London, parking is said to cover an area equal to almost five Hyde Parks.
“The biggest physical acreage is surface parking lots or structure parking,” Ric Clark, chairman of Brookfield Property Partners LP, the world’s largest real estate investment firm, told the news outlet. “For years, we have seen [the development of self-driving technology] and thought we would love to build apartments or maybe if there is a higher and better use we could build on it,” he added.