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Driverless Cars Could Slam Brakes on Self-Storage Sector

Posted by Yijy8kNUMO on October 25, 2017

The approaching transportation revolution is going to have major repercussions in the commercial real-estate sector as driverless vehicles and ride-hailing services such as Uber and Lyft gain more widespread adoption.

The property type expected to be hurt the most: Self-storage. Because people will own fewer cars, they will have more storage spaces in their garages, so they won’t need to rent it.

That is one of the conclusions of a new report on the future of transportation and real estate by the Urban Land Institute and real-estate investment research firm Green Street Advisors. The report says ride-hailing services already are having a big effect on consumer behavior and predicts that “mass adoption” of driverless vehicles will begin around 2030 and be completed about 15 years later.

 There will be winners and losers from this trend in the real-estate world. High-quality malls in densely populated areas might benefit because they won’t be as reliant on parking as many shopping centers are today, the report states.

The trends might also be good for downtown office buildings, because commutes will become less stressful. That may make companies more likely to choose central business locations “where business is easier to conduct,” the report states.

On the other hand, the transportation revolution could be a mixed bag for industrial space. Demand from e-commerce should explode, the report says, but driverless trucks will improve efficiency.

“Goods should spend less time sitting idly in warehouses, likely resulting in a drag on industrial real-estate demand,” the report says.

The report points out that investors need to be savvy about the impact of transportation trends because valuing a property today depends heavily on the long-range future. Because issues that go beyond seven years “are usually ignored, mispricing can result,” the report states.

The opportunity is significant for investors who can figure out these trends now. “But, uncertainty is huge, so humility is in order,” the report states.

Source: Wall Street Journal, October 24, 2017 3:55pm

Author: Peter Grant

Image Credit: Josh Edelson/Associated Press

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