The Roadside Premium

The invention and adoption of the automobile fundamentally altered the value of real estate across the country. The automobile fostered new businesses, created new careers, and redefined where people wanted to live. Society catered to this powerful and disruptive technology in order to harness it’s great potential. We built interstate highways, socialized road repair and maintenance, and drafted laws requiring parking spaces. Collectively, we obsess over the beauty of these machines design and associate ownership of our own personal vehicle as a key part of the American Dream. The past few generations viewed the automobile as their trusted partner but moving forward the automobile will be rendered to servitude.

88% of American households currently own a car [1]. What happens when autonomous cars are ubiquitous? What does the world look and feel like?

In this new world let’s say that ~75% of households now don’t own a car. We have to now assume that ~75% of households have a radically different daily routine, a radically different personal budget, and a radically different chore list. The dreaded daily commute now becomes a laborless task prompting suburbanites to live even further from the city while our robotic chauffeurs safely usher us to our desired destination.

As the idea of car ownership becomes an ancient relic and rare status symbol it would be remiss to ignore the countless businesses that depend on an individual owning their method of transportation. Businesses affected include: auto dealerships, gas stations, parking garages, insurers, auto part retailers, auto body shops, towing companies, and the countless specialty services that include oil changes, window tinting, windshield repair,audio installation, brake pad replacement, tire replacement,etc. All these businesses pay a premium to strategically locate themselves to where people and cars are; prompting the question of what will happen to these roadside businesses when they are no longer needed in such abundance. 

The combination of eCommerce, digitization, and drone delivery will greatly reduce consumers need and desire to visit a business in person, effectively leading to a major consolidation of the surviving retailers. No longer will it be a viable business strategy to locate yourself alongside major roadways in the hope of enticing passersby as the passengers inside of autonomous cars will prove to be an unattentive audience; utilizing this newfound block of time to remote work, consume media, sleep, etc.

After accessing the businesses that typically occupy this roadside real estate it was necessary to bucket these businesses into three tiers:

The robust; These businesses will continue to occupy real estate and have the potential to grow. They satisfy the criteria of being a social hub OR a unique experience OR something that can not be digitized OR act as a liaison between the digital world and physical world.

At risk; These businesses will likely continue to exist but will require a smaller physical footprint OR will exist in less locations OR lose relevance/ necessity.

The transformed; These businesses will cease to exist due to technological disruption OR will rely upon Big Box store partnerships to survive but will no longer occupy their own real estate.

Scenario Example
Will continue to occupy real estate & growGyms: Fitness trend continues presenting opportunities for synergies between gyms, message therapy, physical therapy, and wellness supplements
Will serve as a social hubReligious Buildings: Places of worship and associated schools
Unique experience Sensory deprivation tanks: Rare amenity servicing a niche audience
Can not be digitized Airports: Globalization and wanderlust will continue
Acts as a liaison between the virtual and psychical worldsRetailers like BestBuy: Places where you can receive meaningful human to human demonstrations and repairs on products you have purchased online
Will continue to exist but occupy less real estateMedical Specialists: Telemedicine, wearables, at home test kits, retail encroachment and centralized solutions like SmileDirectClub for braces will result in fewer specialty offices
Will continue to exist but in fewer locations Liquor Stores: How much do people value the experience of touring the store?
Quality of business will be harmed by eCommerce,Digitization,Autonomous Cars and Delivery Drones Laundromats: Is this the most friction filled business that people regularly engage in? Seems ripe for disruption.
Loss of relevancy OR loss of necessity Suburban coffee shops: Coffee shops in the city will serve as a social hub due to the high volume of customers & those in rural settings will act as a default social hub due to a lack of other options. Shops in the suburbs are optimized for drive thru’s and currently don’t function as social hubs
Business will cease to exist Businesses catering to the owners of automobiles. Those who continue to own their own vehicle will have their needs satisfied by the likely duopoly of autonomous car firms that will consolidate repair shops and insurers
Businesses that will survive only if they make strategic partnerships Specialty Retailers: Mattress stores, Sunglass Hut, GNC, GameStop, etc. Big box retailers could and should find ways to partner with these specialized businesses. For example, GNC’s entire store could fit on two shelves inside a CVS/ Walgreen’s. Bestbuy should acquire GameStop to beef up it’s video game selection, cross sell complimentary goods to a dedicated consumer based, and ensure it remains a place to visit for meaningful human guided advice

Now what? We’ll have ample unoccupied retail/office space in a society with little to no appetite or need for new businesses to fill the void. The logical solution is for these buildings to become housing units which would be a welcomed revelation in an era of low housing supply and high housing costs. This would likely be low end housing reflecting both the undesirability of living next to a roadway and the decrease in relative value of the underlying land. Most of these businesses will need be demolished as retrofitting them for housing wouldn’t be cost effective. We can expect to see an influx of condos and apartments replacing what use to be useful and essential businesses. Welcome to the world of greater efficiency and convenience & RIP to the Roadside Premium, no longer will it be rational decision to pay a premium to locate your business along major roadways.


[1] https://www.citylab.com/transportation/2015/04/global-car-motorcycle-and-bike-ownership-in-1-infographic/390777/