7 Ways Parking is Changing the Real Estate Industry
The world of driving is changing.
The world of driving is changing. People are turning more to ride-share services like Uber and Lyft for convenience and comfort. Fewer people are using public transportation and their own cars. With drone delivery services being used by companies like Amazon, delivery trucks are not as essential as they used to be. Although automated vehicles (AVs) are not very common yet, in the future, they may become the norm.
These innovations influence our day-to-day parking habits. The average vehicle will spend 95% of its life parked. But as people turn to ride-share services rather than owning cars, and as companies deliver via drones rather than trucks, there will soon be fewer vehicles on the road. And the ones that are driving will probably be spending much more than 5% of the time driving, meaning there is less of a need for parking spaces.
These parking changes are—or will be— changing the real estate industry. There are effects both on real estate that has yet to be built, and real estate that already exists.
Fewer Prime Parking Spaces
The biggest change produced by these driving innovations is that will be fewer parking spaces in the future. For the parking spaces that continue to exist, their placement will matter less. For example, currently close parking spaces are essential for work places, apartment complexes, and shopping centers. People who drive themselves value getting a parking space that is close to the office, their apartment, the mall, etc. A closer spot means less walking that might be a small hassle, or a major inconvenience if you’re with young children or in inclement weather.
In the future, the concept of a prime parking spot may become outdated. There won’t be as many parking spaces in the street or in parking lots. AVs could drop their owners off at the door, park a far distance away, and still pick their owners up right at the front door. No extra walking necessary. In the future, many street parking spaces will be eliminated. Real estate companies could also redevelop the increasingly unoccupied parking lots for other uses.
Bigger Drop Off Areas
As more people use ride-share services, people need a place to be easily picked up and dropped off. The same will be true for AV owners who want their cars to drop them off and pick them up at the front door. On most parking lots, these pick-up/drop-off areas are currently small compared to the rest of the lot. In the future, that will change. Parking lots will have fewer parking spaces and a larger area designated for pickup and drop-off. If parking lots don’t make these changes, there will be an excess of bottlenecks during prime pickup and drop-off times.
When choosing where to live, people often factor in either their commute time. If they’re a car owner, they want an apartment or home that’s close to work. If they’re not a car owner, they want something that’s a short distance from public transportation. Areas that have shorter commutes to high employment areas and close distance to public transportation are in greater demand, and thus the rent for apartments purchase prices for homes is much higher.
In the future, public transportation and commute times will not be such a strong determiner of property value. When people use ride-share services or automated vehicles, they can respond to emails and review their schedule on their phone while riding to work. This enables them to be productive during their commute, making the travel distance matter less.
As these short commute locations decrease in demand, their rent and property prices will decrease. Suddenly, apartment complexes and homes that have longer commutes and aren’t near public transportation will be more appealing to potential buyers and renters. As the properties that are the most in-demand change, homes and apartments far away from work places and public transits may increase in price.
Cheaper Real Estate Development
In the future, building is likely to be somewhat cheaper because real estate developers will not have to factor in as much of an expense for parking. Construction companies could choose to invest this money in other amenities or features. This change has already started to appear. In 2017, the mayor of Mexico City, Miguel Ángel Mancera, limited the number of parking spaces that must be built on new properties. Cities in the United States soon followed suit, as cities that previously had parking minimums created parking maximums instead.
Not only does the rise of automatic vehicles and ride-share services mean less public parking spaces, but it will also mean less private ones. Currently, in the average home, about 15-20% of the square footage is garage space.But if fewer people are owning cars in the future, what’s going to happen to that space? While some people may be able to convert garages into office spaces or even extra bedrooms, it is more likely that garages will commonly turn into storage spaces. Many people already use their garages for some storage, but in the future, it could mean that garages that used to old three or four cars, hold just one or maybe even none.
If more people have large storage areas inside their homes, people will turn less to public storage spaces. Storage lockers and storage units will decrease in demand, opening public storage facilities for redevelopment.
Fewer Gas Stations
Gas stations take up a huge portion of land across North America. As people drive less, these gas stations will no longer become such a necessity. Many gas stations may be available for redevelopment.
When people choose to drive themselves on long overnight trips, they have to stop at some point to sleep. They may spend a night in a motel. If their trip is especially long, they may end up making multiple stops during their trip and spending a few nights at different motels along the way.
In the future, this will be less common. When people choose to take an AV or ride-share service on a long trip, they can simply sleep along the way. This decrease in demand could put some motels out of business. Thus, in the future, motels are another example of property that could be redeveloped.
Many of the ways that driving innovations are going to change our lives may be unknown at this point. There is no telling how fast some of these changes might occur. But the changes themselves are inevitable. For the real estate industry, this change is exciting! There will be a plenty of property ready to be redeveloped.