Los Angeles Is All About Cars – How Will the Transportation Revolution Affect Real Estate?
If you’ve been in a car in Los Angeles lately, driving the freeways or the city streets, you haven’t likely noticed the revolution that’s underway. The summer traffic made a mess of things as usual, and back to school has clogged things up in all the normal places.
But the revolution is upon us, and the impact on real estate is inevitable. There are fortunes to be made or lost based on anticipating the potential winners and losers. In part one of this story, we’ll talk about the revolutionary transportation set pieces. In part two we’ll prognosticate about the impact on housing design, neighborhood, and lifestyle changes that may arise from the extraordinary changes afoot.
The one car or no car family
“You have to have a car if you want to live in Los Angeles.” Or so goes the mantra. While most will agree with this “law” in 2015, there is plenty of evidence that the future will see a major modification of this thinking.
The beginning of change can be seen in the attitude of teens. A generation ago, the drivers permit at 15 and a half, license at 16, car at 17 was more important than getting a prom date. But with restricted licenses and expensive auto insurance, teens today are often blasé about even getting their license. Many have discovered that a combination of friends, public transportation, bicycles, and even (God forbid) parents as chauffeurs can at least delay the need for driving and owning a car.
This preconditioning is now affecting transportation decisions among adult millennials who can often imagine a future where they would rarely need a car.
Middle class boomers and Xgenners wouldn’t be caught dead in a bus or Metro rail car. But with parking rates hitting $15 or more at downtown and beach locations, more and more millennials are hopping on the train. The tech crowd is eagerly waiting for the opening of the last link in the Expo Line in early 2016. The loft crowd downtown will be able to commute to Santa Monica jobs or to the beach with ease. The Beach condo crowd will be able to commute to the city. Did this transportation change help to create tech on the Westside or did the planners really get it right, anticipating the future. http://la.curbed.com/archives/2015/07/expo_line_extension_santa_monica.php
As the train system extends its reach, connects existing routes, and spawns better feeder systems at popular stops, the trains will increase the potential for a life without a car for many.
The Bicycle’s Time May Be Coming
Have you driven down Abbot-Kinney or Main Street recently? Have you had a chance to drive along an unfettered Venice or Screen Shot 2015-09-04 at 10.23.54 AMWilshire during Cyclavia with a hundred thousand other cyclists? Portland, San Francisco, and Davis have shown the potential for cycling as transportation in cities far less hospitable to year round cycling. What would it take to make LA a cycling mecca?
Plans are afoot by many regional governments to dramatically improve the cycling options along hundreds of miles of county streets. Santa Monica is leading the way, and could provide directions for other local communities to becoming more bike friendly.
Combine the potential for safer, smarter transportation options for cyclists with better and cheaper motorized bikes, and you could see a major shift to bikes as an option for short trips. Where 15 years ago, electric bikes were a novelty item at the huge Interbike Show in Las Vegas, they are now a major factor.
Hub and Spoke – Public Transportation and Bicycles
No pun intended, but other world-class cities, including San Francisco, have developed a hub and spoke system using busses, trains, and bicycles. You park your bike at the train station by your home, ride to your destination, grab your other bike that you park at the station by your office, and ride on to work. In addition, rental bikes and bike sharing systems have cropped up at such transportation hubs.
The Sharing Economy – Uber and Relay Ride
Don’t want to take the train, bus, or bike to the concert, but also don’t want to be thinking about driving and parking and all the other hassles? Millennials who own cars have Uber aps on their phones. In no time, a car is seen approaching on the map, and there is no need to honk when it arrives. The app notifies you.
For many who don’t have a car and use public transportation or a bicycle some of the time, but need to go on a longer trip or one that isn’t easily accomplished by those means, Uber is a solution. Instead of paying $200 a month on a car lease, $100 or more for insurance, and more for gas, parking, and repairs, the car-free approach now has a fallback position to shared transportation. Uber isn’t always less than a cab, but it fits the modern citizen like a hand in a glove. It works from your smart phone.
Maybe you want some real California-lifestyle personal driving time. Hit your Relay Ride app and rent a car from your neighbor. Much like Air BnB, Relay Ride provides a fast, convenient, and inexpensive alternative to Rental Car companies. Car owners who don’t need their car everyday list their car as available to rent. Commonly the car owner will even bring the car to you, and pick it up at the end of your rental period.
All of the above would be plenty to suggest that a revolution is upon us. Ten years from now, every neighborhood from downtown to the beaches will be impacted by these changes. But no change already discussed can compare to what is almost upon us. By 2020 numerous car companies will be offering driverless cars. Audi, BMW, Volvo, Tesla, Google, Apple, and Uber and virtually every other major automaker is planning a driverless car by 2020.Screen Shot 2015-09-11 at 9.30.53 AM
Uber makes no secret that they want to replace their independent drivers with driverless vehicles as quickly as possible. Of course, even if they were to start actively buying cars in 2020, it would take years to have a fleet large enough to displace all drivers.
But make no mistake, the billions of dollars being invested at this time will result in operational vehicles very soon. In fact, some reports suggest that at least one or two manufacturers are ready to ship now, but are held up by regulatory issues. Many also feel that the public needs to be introduced to fully autonomous cars slowly.
Cars today come equipped with side sensors, back up warnings, drift alarms, automatic braking, and other pieces of the final, fully autonomous product. BMW’s 7 series sedan will now be capable of hands free driving for 15 seconds at a time. Actually, it could go far longer than that, but to meet regulations, they will require the driver to retouch the wheel at 15 second intervals.
Such incremental changes will be added on top-of-the-line cars over the next 4 years. By 2020, many cities and states should have approved various cars for autonomous driving, and the public will have realized that they are safe and beneficial (or so goes the industry thinking.)
Thinking About the Future
If the streets were safer, many would use bikes for short trips and as spokes on another transportation hub. As Los Angeles public transportation becomes more ubiquitous and smarter, trains and busses may become a solid transportation source for another large group. Now add in the idea that a shared vehicle can come pick you up and drop you off at a very low cost (no driver = dramatically lowered cost per mile), and you may be perfectly willing to give up owning a car. Or, if you own a car, will you commonly make it available for rent to RelayRides.com
In a future where you owned no car or only one, where would you live? What would your home look like? What would be the impact on retail and service business locations? We contemplate the Los Angeles Real Estate scene circa 2025 in part 2.
Bill Rayman is looking forward to being you most critical financial resource as you work towards purchasing any real property. There is no cost for his advice. Call Bill today and see how much you qualify for: (424) 354-5325