29 October 2018

Is the sky the limit? Commercial drones in a (very) modern world

On the 1st of December 2013, Amazon.com CEO, Jeff Bezos revealed his plans for Amazon Prime Air – an unmanned drone delivery service - in an interview on CBS news programme, 60 Minutes. The scoffs from the sceptical would surely have been audible, even among the most forward thinking in Silicon Valley’s coffee shops and break-out spaces.

Fast forward to the 7th December 2016 and on a dewy morning in Cambridge, an Amazon Fire TV Stick and pack of sweet and salty popcorn touch down outside a country house to complete one of the first, fully autonomous drone deliveries in the UK. Science fiction, it seems, is not too far off becoming a reality.

It is worth remembering that such innovations are still very much in the testing phase and at present, the regulatory environment in the UK does not allow for wide-scale commercial drone operations, but a large number of organisations are already getting ready for this to change.

Legislation was implemented in July 2018 to regulate the use of drones around our airports, to impose registration requirements for certain drone owners and competency testing for pilots of certain types of drone. The Government has also run a number of further consultations (the most recent closed for submission on 17 September 2018) as to the safe use of drones to support the UK’s High Tech Economy going forward.

The use of drones for commercial purposes appears to be a key part of the Government’s vision for transport and industry and some businesses, such as Skyports, are readying themselves for the relevant legislation to catch up with current levels of innovation in this sector.

Skyports currently have a portfolio of 15 rooftop sites in Central London and have ambitious plans to expand this to 100 in the next 18 months. Once the regulatory barriers have cleared, the company will look to create a network of ‘Vertiports’ on their sites (which currently use rooftop space at multi-storey car parks, office buildings and railway stations).

Clearly, a lot of work will be required before a fully-fledged drone industry can flourish in the capital, which is home to some of the most congested airspace in the world, but the potential value of the industry is also not to be underestimated – the Government estimate that it could be worth £100bn by 2025.

Switzerland lead the way at the moment, where drones are used on a daily basis for carrying medical supplies between laboratories and hospitals as well as for mapping and 3D modelling in the mining, surveying and law enforcement industries. Similar plans are reflected in the UK drone-tech industry as well as even more ambitious ideas for unmanned ‘taxi aircrafts’ such as the UberAir model, currently in early stage development in the US.

With the uncertainty of Brexit looming large, landlords may welcome any further opportunity to create value out of otherwise unused space in their portfolio. Skyports suggest in their pitch to landlords that they can point to increased income generation, the creation of a unique selling point and enhancing sustainability credentials as among the main benefits for adopting a Skyports Vertiport.

As this industry begins to take shape, we expect that a variety of issues may start to become prevalent for landlords and other property industry professionals looking to benefit from this technology:

  1. Ownership and documentation of rights to use the airspace above the landlord’s buildings;
  2. How to value rooftop spaces and consequential impacts on rent review for the building as a whole; and
  3. Impacts of ‘Vertiports’ on existing tenants and the terms of any existing headleases (e.g. permitted alterations, insurance obligations and permitted user clauses etc).

The momentum behind the use of commercial drones in urban environments is undoubtedly picking up and the Government are taking steps to make sure that the regulatory system and technological infrastructure are in place to welcome this new industry with open arms. If their predictions are correct, the capital’s land-owners will need to direct their focus upwards to avoid being left on the ground.

Andrew is an associate in our Commercial Real Estate team.

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