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Innovative Transportation Technology Projected to Impact Lifestyles, Also Bringing Investment Opportunities

Transportation technology is bringing change and that includes impacting the choices and decisions of everyday life. In a report just issued by MetLife Investment Management, new transportation technology will influence where people choose to live, work and play, while also presenting real estate investment opportunities to some.    

The report, “On the Road Again: How Advances in Transportation Are Shaping the Future of Real Estate”, identifies both near term and longer term investment opportunities in real estate.  Near term opportunities include the development of off-transit apartments and the redevelopment of existing parking lots. In the somewhat longer term the report identifies trends potentially leading to a resurgence in urban retail and a revitalization of the suburbs.  These opportunities are arising from new innovative transportation technologies such as ridesharing services, autonomous cars and electric vehicle technology.

The research suggests that the design and location of future commercial real estate projects will be heavily impacted by technology over the coming decade.  One example is the likely increase in value of development sites that offer appealing access to uncongested roadways, but provide limited public transportation.  Two other key findings relate to parking lots and urban retail centers:

  • Parking lots: Ridesharing services are predicted to lessen automobile demand in urban areas, resulting in a decline in parking lots. Investment opportunities arise through the repurposing of these lots which may bring new life into outdated redundant developments.
  • Urban retail centers: Ridesharing has the potential of shifting consumer spending patterns, as it offers less expensive transportation choices and in some circumstances eliminating parking costs.  The change leaves funds for urban shopping and dining that may benefit physical stores on the street.

The report also offers a case study of the impact of ridesharing and carpooling services in San Francisco.  The growing use of these services has been tied to a decline in rental premiums for on-transit apartments to 15 percent from the 20 percent historical average.  These are properties located within a 5-minute walk of a transit stop.

Further, an analysis of both publicly available and proprietary data notes that car manufacturers will likely develop autonomous vehicles that they can scale up to a fleet level, allowing them to substantially decrease the cost of a single-trip ride.  Consumers will then have the ability to take longer and more frequent trips at a cheaper price.

In the area of vehicle electrification the future development of smaller, cheaper and more efficient solid-state batteries is expected to increase driving range by as much as 200 percent, while also helping to reduce manufacturing costs.  This lends to a future of highly accessible, highly efficient and comparatively inexpensive transportation.

The report was authored by Adam Ruggiero, head of Real Estate Research and Will Pattison, associate director, real estate research at MetLife Investment Management.