We're Driving Less And Taking Public Transport Less: What The Future Of Mobility Means For Real Estate
Real estate has always been shaped by the way we move around the world.
The post-war rise of the car led to the boom of the suburbs and of out-of-town shopping malls. South London is built on tough-to-tunnel-through sandy soil rather than North London's clay, meaning it has fewer underground lines, and so is less densely populated (and poorer). The world’s great cities are built on coasts and rivers because of the access by boat that provides.
The way we move around the world today is changing rapidly, pushed by technological and social changes, and this will again shape real estate. Car journeys in cities are dropping, but so are public transport journeys, and yet cities are becoming more populated. Ride-sharing apps are proliferating and can be harnessed by developers. Electric cars are changing what mixed-use schemes can deliver.
Here are nine key themes about the future of transport and mobility that real estate professionals of every stripe need to look out for, as outlined by a panel of experts at Bisnow’s London State of the Market event this month.
Public transport journeys are dropping, but not all such journeys are equal
Earlier this year it was revealed that overall journeys on Transport for London fell in 2017, and Arup Chief Economist Alexander Jan said this trend is being mirrored in major cities across the world. But TfL Head of Strategy and Outcome Planning Lilli Matson pointed out that commuter trips had remained constant: It was “discretionary journeys” that had fallen.
“You can see a correlation with more retail and leisure services being consumed in the home,” she said. “That has a big effect on the transport network in that we’re seeing a growth in van traffic serving that new market.”
She said that means there are constants as well as changes that the transport network needs to plan for. The same is true for real estate, with journeys to offices remaining constant, but retail and leisure continuing to be challenged.
Not everyone can work from home or move to a hipster location
London & Continental railways chairman Lorraine Baldry made the salient point that technology like shared autonomous vehicles might make real estate like car parks obsolete, but it will make a lot of professions like car mechanics obsolete, too. The young people in particular that would have gone into professions like this need to be retrained. Also, while people with nice big houses, with studies and open-plan kitchens, can work from home, not everyone is so lucky, so the transport system needs to be able to cope with those people who don’t have the luxury of working from anywhere they want.
Public bodies want fewer cars, more affordable housing and to open up new areas
TfL has been mandated by the U.K. government to increase the amount of development it is undertaking in and around its stations, and Matson said there are some key points that the real estate world should note. Firstly, as a public body with a mission to promote “good growth” these developments would have to comprise a significantly higher proportion of affordable housing than developments on private land. In more central areas especially, TfL would be specifically looking to create schemes that reduce the reliance on cars and promote walking and cycling. And it would also be looking to create dense developments around non-central stations with speedy connections to central areas, to open up new districts for commercial and residential use that had previously been seen as too on the fringes.
Development around stations is only going one way: mixed-use
In terms of how that development around transport nodes will be undertaken, it would seem that mixed-use is the only way to go. Baldry pointed out that King’s Cross Central in London, one of the global exemplars of a development around a transport hub and in which LCR is a joint venture partner, has been developed “so that once you come in to the station, anything you could possibly need, be it offices, shops or restaurants, is in walking distance, and that is very appealing to businesses”.
She said education played a key part in launching these schemes: The first occupier at King’s Cross Central was the Central St Martins college.
To be seen as progressive, you need good transport
Cities and companies increasingly want to be seen as progressive and forward-looking as they compete with each other for investment and for the best and brightest young workers. Transport is now central to this, and that is something real estate needs to bear in mind, especially those involved in large-scale development.
“If you’re going to talk about a progressive scheme, then thinking about transport progressively is central to that,” Savills Director of Global Occupier Trends Nicky Wightman said. “If you look at what Sidewalk Labs is doing in Toronto, mobility is central to that project. That is in no way unique, mobility makes a statement about whether a scheme is progressive: How are people going to get here, and what does this mean in terms of economic development?”
Electric vehicles could hasten new types of mixed-use
Can logistics or last-mile delivery facilities and residential ever truly be mixed, Jan asked, given the noise that trucks make? But Matson made the point that electric vehicles reduce noise significantly, and combining the two would reduce the competition for space in urban areas.
All new transport systems and developments need to factor in ride-sharing and other new tech
Uber Head of Cities for the South of England Eugenie Teasley produced an interesting stat: around 30% of Uber journeys begin or end at a public transport node.
“We know Uber isn’t the panacea, but we think it can be part of a wider public transport platform,” she said, and TfL’s Matson agreed, saying that all new public transport projects and indeed all real estate developments should be looking to integrate services like ride-sharing apps, bike and scooter shares, and walking and cycling options from their conception.
Developers need to collaborate early to harness the benefits of tech firms like Uber
One of the most interesting tie ups between a tech company and a real estate firm is that between Uber and U.K. multifamily developer Moda, where residents at the company’s schemes receive £100 a month in Uber credits if they agree to forgo a parking space. Teasley said the scheme is set to be extended beyond an initial few developments, but that the collaboration needs to be “thoughtful and undertaken early in the development process” to be most effective. But overall, it could be part of a positive movement toward reduced private car ownership.
Start thinking about super fast elevators
One futuristic possible transportation innovation will spur a need to drastically improve one element of buildings that are already a cause for much complaint. Flying taxis could be introduced by around 2025, Teasley said, which would bring about fundamental change in cities beset by gridlock like San Francisco or Rio de Janeiro. In terms of the direct impact on real estate: “We’ll all need a super-fast elevator to get to the roof,” she said. Start factoring that in on new schemes now.