Mobility and Real Estate
Any major automaker moving into smart mobility should be in the mobility platform and real estate business.
One of the most brilliant mobility minds I know doesn’t work in transportation. Terence O’Connell works in real estate, at CCM Group in Washington, DC (ccmgroupllc.com). He has been thinking about AV-enabled communities, towns and cities for many years. He sees “autonomous vehicle technology becoming the single most impactful force on all real estate over the next 50 years. Interest rates, demographics, regulation, and all other forces will pale in comparison to the approaching transportation revolution”.
In the U.S. 40 to 60 percent of all land in urban areas is devoted to transportation (roads, freeways and parking). Today we have 800-million parking spaces for our cars. As AVs reduce the need for parking, O’Connell feels we will see a 5 percent annual decline, which will free up 40-million parking spaces for other land uses each year.
Rather than focusing on how Waymo’s self-driving cars fit into our world, O’Connell spends more time considering what kind of new communities/cities can be designed around these coming robotic vehicles.
It’s interesting to watch major automakers launch shared mobility services. I’m very pleased to see them offer consumers new mobility options—ones that are very efficient and far more inexpensive than previous offerings. But should they see widespread success in this new market, it will likely cannibalize their automotive business, and significantly lower yearly revenue.
If I was a CEO of one of these major automakers, I would pay attention to O’Connell and have a broader focus on real estate, transportation, autonomous vehicles and cities. While autonomous vehicles will have a $2-trillion impact on the automotive industry, less attention is being paid to their impact on real estate, which encompasses $25-trillion in physical assets in the U.S. alone, nearly all of which were designed to accommodate the car.
O’Connell cites professor Gilles Duranton who wrote, “History tells us that making money with transportation is hard. Instead, money often is made with the land. What was possibly the first suburb of America, the Main Line of Philadelphia, Pennsylvania, was developed by rail entrepreneurs who realized that developing suburbs was much more profitable than operating railways.”
The AV city future O’Connell sees is a tiered system. He doesn’t focus only on how people move around their metropolitan region in vehicles similar to today’s cars and light trucks. He also sees a major opportunity for new, smaller-sized internal automated micro-movement systems which deliver goods on demand from a nearby distribution center. Like Elon Musk with The Boring Company, O’Connell ultimately sees a future intra-community automated movement taking place underground.
Today, he looks at new developments featuring automated micro-movement systems for multifamily properties featuring 3 elements. First, there is the small delivery robot. Second, a new elevator, just for the robots/packages. And third, a large (four to five feet square) “mailbox” in front of the resident’s unit to receive packages. O’Connell also sees these systems automatically taking out the trash.
Crescent Heights, a Miami-based residential developer, recently announced that its high-rise project in Santa Monica, California, will have a hallway robot to make small deliveries to residents—just as O’Connell has envisioned.
On a somewhat larger scale, O’Connell has interest in Babcock Ranch, a new master-planned community in Florida, which has intentions to integrate autonomous vehicle service into the transportation infrastructure. But whether it’s a multifamily property or a new planned community, these will be closed transportation platforms.
In O’Connell’s vision, America in 2050 might not have one nationwide, open transportation platform of uniform roads. It could slowly be replaced by countless small, closed transportation platforms. He also sees cities, towns and large new developments planning, designing and managing independent transportation platforms. Restructuring public mobility in this manner could have a substantial business aspect to it.
Any major automaker moving into smart mobility should not only be in the business of creating/delivering a transportation solution that makes a city awesome. They should be in the mobility platform and real estate business, capturing significant new revenue and profits from enhanced real estate values that their mobility offerings create.
Visteon Corp. is developing DriveCore, an open platform to control and operate autonomous vehicles.
In-car video shows that the backup pilot of an Uber Technologies self-driving car was not watching the road just before the vehicle struck and killed a pedestrian last Sunday night.