Uber and real estate

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Want to spend some more time today on an idea I mentioned briefly in yesterday’s post: That Uber (or something like) has the potential to radically reshape our city.

To understand where I’m coming from, you need to take the following two pieces of information as given:

  1. Google or some other company will release a practical self-driving car within the foreseeable future (say, 10 years)
  2. Uber or a company like it will replace human taxi drivers with self-driving taxis which will be radically cheaper than current taxis (because there is no human labor involved)

The above isn’t sci-fi; I put the over-under at seven years from now.

What are the implications of this new, cheap, on-demand transportation for LA?

Currently, everything we build is geared around individuals owning, and having to store, cars. Because we mandate a very high level of parking for all new structures (residential, office, and retail), developers are forced to allocate huge amounts of money and space to cars¬†that would otherwise go to the underlying use (apartments, offices, stores, etc.). This raises the costs of every kind of real estate we consume (for example: building one under-ground parking space can cost $50-60,000; imagine what that looks like when you’re building a new Target!).

With cheap, on-demand transportation, LA could easily relax the parking requirements, leading to denser and therefore cheaper living and working space.

And what about existing buildings, particularly those built since the 1960s, which have huge amounts of space allocated to parking? I believe those parking spaces are going to end up under-utilized. That means there is going to be an opportunity to repurpose and/or replace much of the space allocated to parking for other, higher-value uses. There are already developers in NY turning parking garages into condos; I believe we will see that kind of action here as well, so long as the city figures out how to relax / streamline the planning permission / building codes to make this feasible.

I’m certain I’m leaving out a few big changes… there are bound to be others, because this is a major, society-level trend that’s coming. People are going to make a lot of money betting on / around this trend. I’m not sure what the bets should be yet, but stay tuned.

 

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