Commercial Investment Real Estate July/August 2018

As companies like Uber and Lyft pour millions of dol- lars into driverless car technology, real estate investors now are forced to face a new reality in the transportation demands of consumers. Brad Greiwe, co-founder and managing partner of Fifth Wall, a Los Angeles-based venture capital firm focused on technological innovation in the real estate sector, believes the impact of autono- mous vehicles will be industry-changing. “A meteor is going to hit the real estate industry that will fundamen- tally alter the value and make-up of every asset class,” Greiwe says. The growth of ride-sharing services has led many con- sumers to rethink institutions of transportation that for years have guided the development of urban and suburban real estate. As ride-sharing services integrate driverless car technology and become more comfortable, user friendly, and cost effective, many expect car ownership rates to plummet and the average consumer’s reliance on public transporta- tion to fade. Bringing Innovation Although automakers have yet to fully implement autono- mous vehicle technology, industry experts believe now is the time to adapt. As new developments take shape, inves- tors intent on ensuring a timely and profitable exit have focused their attention on innovative features that future buyers will crave. For example, Cincinnati’s 84.51 Centre, opened in 2015 and designed by Gensler, was designed to seamlessly ° integrate three levels of parking into the structure’s unique facade and extend natural light to the garage so it eventu- ally can be turned into office space. As recently reported in the Los Angeles Times, AvalonBay also has designed parking for a downtown Los Angeles development with driverless cars in mind. The project’s garage space will have level floors, rather than inclined, capable of conversion into internal retail and entertainment space. Developments both new and old are being redesigned to accommodate the growth of the sharing economy. “Forward-thinking real estate owners and operators are focused on creating better ingress and egress for shared vehicles,” Greiwe says. “The value of existing malls will come to be driven by mixed uses and entertainment-focused tenancies, and a lot of that will be because of reduced parking, predictive data and the facilitation of shared driving through technological innovation.” Impact on Real Estate The value of autonomous vehicle technology to the real estate sector is not just in the prevalence and ease of ride sharing. As such technology is perfected, the efficien- cies and economics of automated services also may force adaption for investors in industries where real estate is fundamental. Self-storage facilities that are based on their close prox- imity to urban centers now are facing competitors that are offering innovative storage solutions that will get even cheaper and easier to use with the introduction of driver- States with Autonomous Vehicles Enacted Legislation and Executive Orders AK ME VT WA MT ID ND WY MN SD WI IA MI IL IN NY OH PA NH MA NJ RI CT Enacted Legislation Executive Order OR NV CO NE MO KY WV VA MD DE Both None CA UT NM AZ HI KS OK AR LA TX TN MS NC AL SC GA FL DC AS GU VI MP PR Source: National Conference of State Legislatures 34 July | August 2018 COMMERCIAL INVESTMENT REAL ESTATE

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