Driverless Cars Will Hit L.A. First

Los Angeles is primed to be among the first city to see the impact of driverless vehicles. As a care city, Los Angeles will likely see the major changes and benefits that come with driverless vehicles, according to research from CBRE. The report specifically calls out Downtown Los Angeles and the Inland Empire as the submarkets that could see the biggest impact from driverless vehicles.

“The size and complexity of the Los Angeles area will result in a targeted rollout,” Andrea Cross, head of office research for the Americas at CBRE, tells GlobeSt.com. “Because Los Angeles County is comprised of many distinct yet interconnected cities, full implementation will require regulatory approvals from a large number of jurisdictions, potentially lengthening the time that it will take for AVs to be able to travel freely throughout the area.”

The impact of driverless cars will be significant in a car-reliant market like Los Angeles. “Autonomous vehicles could make the large Los Angeles region more easily navigable due to the ability of passengers to do other things while in the vehicle,” says Cross. “Because people will be able to engage in other activities in an AV, such as sleeping, working or watching movies, they may be willing to travel greater distances to work and other locations. Also, self-driving cars could lessen congestion because they eventually will be able to communicate with each other, maximizing the overall efficiency of the vehicle network.”

This transformation is closer than you might think. Cross anticipates a “meaningful” rollout of driverless cars in Los Angeles between 2021 and 2025. “Los Angeles’ temperate weather will make rollout easier than in some of the other largest U.S. metro areas such as Chicago, New York and Boston,” she explains. “However, the complexity of navigating such a large region as well as the multiple jurisdictions that comprise the Los Angeles metro area mean that rollout likely will lag some other western markets.”

With these changes coming quickly real estate investors and developers should be preparing for potential changes today. “Many owners and developers are not repurposing or building their structures in anticipation of AVs due to the need to provide sufficient parking to tenants today, especially in car-dependent markets like Los Angeles,” says Cross. Some of these potential changes include making parking structures convertible for alternative uses in the future, but investors haven’t made these requirements yet. “Investors are not yet demanding that parking structures be convertible to other uses because they do not believe that autonomous vehicles will become widely used during the length of time that they plan to hold assets acquired today,” adds Cross. “Because convertible parking structures typically are costlier to build, most developers continue to construct traditional parking decks with sloped floors and lower floor-to-floor heights than needed for future conversion to office, hotel or apartments.”

Today, developers aren’t seeing the need for convertible parking structures, but tenants will start requiring them. “The tipping point for developers and owners to invest in convertible structures will be when tenants require them,” says Cross. “Given heavy investment in autonomous vehicles by many technology and automotive companies, commercial real estate professionals should closely monitor the development of self-driving cars and prepare themselves for the possibility that rollout may happen sooner than the industry broadly anticipates.”