Shopping Center Business

MAY 2016

Shopping Center Business is the leading monthly business magazine for the retail real estate industry.

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Page 286 of 358

TRANSPORTATION 282 • SHOPPING CENTER BUSINESS • May 2016 W hat do the automobile indus- try and the State of Michigan have in common? Both are de- pendent on the automobile in the most fundamental ways. Michigan is home to all three major U.S. auto manufacturers, which represent the cornerstone of its industrial economy. Like Michigan, the shopping center industry is built around the individual mobility model of the auto- mobile. While this may seem obvious to most shopping center executives, what is less obvious is that today's automobile is a mere asterisk in history, having been in mass production for little more than 75 years. Without it, there is no shopping center industry — not as we know it today. Needless to say, fundamental changes in how we travel — especially when they affect our love affair with the automobile — could have profound impacts beyond the automotive industry itself. When Rick Snyder, the governor of the state of Mich- igan, calls the "automobile industry of to- day" the "mobility industry" of the future in his 2016 State of the State Address, the shopping center industry should stand up and take note. The governor's strong hint that we are at an important tipping point in the evolution of automobile technology isn't only a warning sign of changes on the horizon, but also a glimpse into the world of opportunity that changes in transporta- tion technology portend. For shopping centers and other brick- and-mortar retail destinations, the growth of alternate transportation options and new technologies is leading to big design and operational shifts. For retail deci- sion-makers and commercial real estate professionals alike, understanding these transportation trends and appreciating how and why even more dramatic shifts might occur is becoming an increasingly urgent priority. THE FIRST GLIMPSES Transportation policy and priorities have always impacted retail development in a big way. Consider Washington, D.C., for example. Few outside of Washington took note in the 1960s, when the federal city diverted highway funds earmarked for the completion of Interstate 95 through the city and partnered with neighboring states to build a 103-mile regional subway system. More than 50 years later that sys- tem is responsible for literally trillions of dollars of development around its 91 stations, and is preparing for expansion around its perimeter. Washington's deci- sion contrasts sharply with the State of Georgia's decision, made at around the same time, to expand the combined In- terstate 75-85 highway system to up to 16 lanes right through downtown Atlanta. In Boston, Federal Realty's ground- breaking Assembly Row mixed-use proj- ect opened in 2014 along with the city's first new MBTA station in over 30 years, just three and a half miles from downtown Boston. Nationwide, dedicated space for shared bicycle and car services have been steadily replacing conventional urban parking spaces for over a decade. THE (NOT-TOO-DISTANT) FUTURE These examples may pale in compari- son to what's coming next. The transpor- tation future is not a distant abstraction; it is an increasingly real and relevant phe- nomenon. With the growth of alternate transportation options like Uber, Zipcar and City Bikes, it's clear that there's a push for new transportation options and more flexible transport models. In New York City, well over half of non-subway transportation is made up of some form of shared transportation. New York resi- dents have more options than ever before — and they are using them. These developments may seem rudi- mentary as we move into the 2020s and 2030s. We are entering the early stages of a transition from individually owned and personally driven automobiles to some- thing very different: a more "communal" automobile ownership model. It's possi- ble that we will soon see consumers buying self-guided automobile time like they buy cellphone data gigabytes. Self-driven Goo- gle cars are already being tested, and cre- ative solutions from vehicle "timeshares" to subscription-based auto services are actively in discussion. In this new world, automobiles will become "computers on wheels," says Governor Snyder. As new technologies take hold, look for some cities to limit or even ban traditional cars — favoring a model where computers guide vehicles through efficient city street grids. Vehicles, rather than parking for the day, will simply move on to the next user. While Baby Boomers may resist these changes, millennials have already made it clear that personal ownership of automo- biles is less of a priority, and shared use and ownership will not represent a radical transition. COMMERCIAL CONSEQUENCES However these inevitable transporta- tion advances take hold, they will impact retail in profound and perhaps unexpect- ed ways. Fast-forward 10 to 20 years, and the transportation landscape throughout America might look more like New York City today, with foundational changes be- ginning in the cities and working their way to the suburbs. How do these changes apply to the retail industry and shopping center landscape of today? From regulatory guidelines that dictate parking capacity, to designs and complementary tenant rosters designed to take advantage of shared parking and locations selected primarily due to their highway access, today's retail destinations Traffc Patterns Changing transportation products and priorities will have a profound impact on where and how we shop. Nick Egelanian

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