United States: WALL-E Take The Wheel: Thinking Through The Possibilities Of The Driverless Revolution

The advent of driverless transportation has begun and advances in this area continue to outpace the expectations of many. This technology presents many exciting opportunities for business owners, landlords and real estate developers.  Arizona has been an early hotbed of experimentation for self-driving vehicles, but interest is growing rapidly across the county, as large companies like Uber and Waymo (owned by Google's parent company, Alphabet) drive innovation in this field. As cities begin to compete to win the business of these technological innovators, landlords, tenants and real estate developers are presented with new risks and opportunities. The rapid changes in this area, however, should not disguise the risks, as society moves to incorporate this technology into our existing network of offices, warehouses, homes and roads.

How does a self-driving car drive itself?

As TechCrunch points out, in the case of Uber, self-driving vehicles are equipped with a variety of overlapping, redundant detection systems that use a variety of different imaging technologies to detect pedestrians, other vehicles, and the roadway. In many applications today, the self-driving cars also have a human monitoring the vehicle as a failsafe, but as Fortune reports, Waymo has already begun testing self-driving vehicles without a human "failsafe" in Phoenix, Arizona.

Where are these self-driving cars driving?

In many cases, self-driving vehicle technology is being developed side-by-side with ride-hailing applications like Uber, Lyft and Waymo. However, companies are already considering applications of this technology in the context of logistics networks; Waymo in particular has already announced that it will use self-driving trucks for freight delivery for its data centers in Atlanta, Georgia.

The Business Owner?

Business owners already offer amenities to their employees, like office workout areas, co-working spaces, and incentives for environmentally responsible transportation, in order to attract talent. Accommodations for self-driving vehicles could join that list of amenities. Additionally, as the availability of parking in developed, urban areas rapidly decreases, and the cost of parking goes up, accommodations for self-driving vehicles may become a necessity. To that end, there are a few critical questions that the business owner needs to assess. First, where will the vehicles park? If the space leased or owned by a business owner has dedicated parking and facilities that can accommodate self-driving vehicles, then the business owner would simply need to retain the parking allotment necessary for its employees. However, as noted above, in many cases, driverless cars are being used in conjunction with ride-hailing services. Given the close relationship between the two industries, driverless vehicles may ultimately reduce the parking needed for the operating business. Practically speaking, all the business owner may need is a drop-off point or lane at its building to allow its employees to get in and out of the vehicle, so as not to impede traffic. If a building does not have sufficient parking, then a business owner (or its landlord) who wants to encourage use of driverless transportation may need to consider independently licensing spaces nearby where the vehicles can park themselves. The benefit of a self-driving vehicle is that parking may not need to be located adjacent to the business owner's premises, which may command higher rents. The vehicle could drive itself to a parking lot or some other facility located on less expensive real estate.

Though a business owner may not facilitate driverless transportation directly, as the popularity of this form of transportation grows, business owners leasing space may have to confront the issue if their landlord provides infrastructure to support driverless transportation. While the possibilities of driverless transportation are exciting, there are risks, as highlighted by the recent, tragic death of a pedestrian in Arizona. Given these hazards, a business owner's lease should clearly allocate such risk associated with any infrastructure related to driverless transportation, and any injuries resulting from accidents in those locations.

The Building Owner?

The concerns of the building owner are similar to the concerns of its tenant, the business owner, though the building owner in many cases may be better positioned to facilitate the use of driverless transportation. A building owner will need to determine if accommodating driverless technology will spur interest and demand for its building.  If driverless transportation will be permitted, the owner must decide whether (i) the building will contain infrastructure to encourage the use of driverless transportation or (ii) the building will simply accommodate driverless transportation for those tenants in the building who elect to use it. Critically, the building design should reflect these decisions, and the allocation of risk and the responsibility for insurance in the instance of accidents should be clear as between the building owner and its tenants. Alternatively, if a building owner elects to forego driverless transportation, such owner may include rules and regulations applicable to the building to prevent or prohibit such activities.

The Real Estate Developer?

In many ways, the real estate developer is faced with the most significant set of questions related to driverless transportation. As this technology becomes accepted in larger cities, investors and tenants may increasingly insist on accommodations for driverless transportation as part of a suite of environmentally responsible amenities. As new buildings go up and old buildings are refurbished, driverless transportation presents several significant opportunities in building design.

Whether driverless transportation is inseparable from ride-hailing services or not, the advent of self-driving vehicles will ultimately reduce the park counts (or at least the on-site space necessary to devote to parking) necessary for a building. Further, the growing precision in self-driving technology may allow for parking decks that tighten drive lanes and parking spaces. At the same time, local municipalities will need to keep pace with these developments so that parking requirements under local zoning and building codes do not require parking numbers or design which are no longer necessary in the age of driverless vehicles.

Building design would also need to incorporate infrastructure for passenger drop-offs. If the majority of driverless vehicles are combined with ride-hailing services, then driverless transportation could be incorporated into a project with a feature as simple as a dedicated lane for drop-offs and pick-ups at the site.

Thinking expansively, the wide growth of driverless vehicles may create new opportunities for formerly undervalued real estate. A developer could consider creating a driverless vehicle hub that serves multiple properties. While the location of the property would still be critical, developers could look to properties near highways and away from central business districts, allowing driverless vehicles a common location between multiple areas of density, where the vehicles could be stored, and possibly serviced and repaired, while waiting for a new passenger.

The driverless transportation revolution is starting and the beginning of this revolution will affect each part of the network connecting employers, employees, business owners, building owners and real estate developers, beginning with questions of building design and infrastructure and ending with critical questions about the allocation of risk should the driverless vehicle go haywire. Without a doubt, the resolution of many of the issues discussed above will depend on the specific way driverless transportation is embraced and integrated in our lives.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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