Artificial Intelligence, or AI, is no longer just something from an Asimov novel. Today, AI is everywhere, and you’re using it whether you know it or not. For example, Google uses AI to predict your search terms, Uber uses AI to determine driving distances, and some Roombas use AI to scan the size of your room before cleaning.
It’s no surprise, then, that AI and its many benefits are being embraced within numerous industries, such as manufacturing and medicine. In fact, global research firm Gartner recently reported that 37% of organizations have already adopted some form of AI, a 270% increase in just the past four years.
Now, it looks like commercial real estate will be the next industry to embrace AI.
AI in Commercial Real Estate (CRE)
A recent report by the Altus Group that surveyed 400 CRE C-level and senior executives in both front and back-office positions throughout the world reveals that most expect AI to have a significant impact on the industry:
43% said AI will have a major disruptive impact.
46% said AI has the potential to create significant cost savings and operational efficiencies.
11% said AI will have minimal or no impact on CRE.
While many CRE leaders see AI for real estate as a positive, they also recognize the potential impact on jobs and how they will evolve. While it remains clear that there will also be a critical people component to CRE, three-fourths of CRE executives believe automation will eliminate jobs.
However, this is balanced by the more than 70% of respondents who believe it will also introduce new roles to the industry. Ultimately, effective AI-based CRE insight should combine the expertise of a company’s real estate professionals with machine learning models to identify value creation opportunities.
5 Ways CRE Firms Can Benefit from AI
Here are five ways that CRE companies can utilize AI, along with some AI real estate companies that are driving adoption of the technology.
1. Space Utilization
Unused square footage is wasted money—yet space is frequently not utilized effectively. Technology is poised to change this with AI-powered solutions designed to help real estate professionals better manage office space. For example, the recently unveiled TRIRIGA by IBM is an AI that collects data from several sources, such as WiFi and IoT sensors, and then analyzes it to deliver valuable insights about space utilization and occupancy across an entire real estate portfolio.
IBM believes that TRIRIGA will also be an invaluable real estate AI tool for creating safer places in a post-COVID era, better organizing spaces and managing new cleaning and maintenance projects to improve occupant well-being.
2. Energy Utilization
High energy bills can be a burden on any tenant, limiting their ability to lease desirable locations. AI solutions can combine utility smart meter data with weather data and rate information to shine a spotlight on the issues that really drive energy bills through the roofs: peak demand charges and wasteful use. Companies like Gridium are leading the way on this AI-powered technology.
3. Marketing and Sales
Tenants, buyers, sellers, and investors are spending more and more time online gathering information about commercial real estate deals and opportunities. CRE firms could utilize AI to display personalized promotions or messages to these individuals as part of a lead management program. On the broker side, it could be used to analyze past sales records and intent alongside existing market data in order to make buying and selling recommendations.
4. Investment Management
One of the most useful features of AI is its ability to “predict” the future, making it especially valuable for those interested in investing. Using predictive analysis, AI solutions can accurately assess property value and often identify the perfect time to sell or buy space. AI is also able to anticipate rent fluctuations to help tenants prepare or give them a leg-up in negotiations.
Check out how one up-and-coming real estate AI company, Skyline AI, is using predictive analysis for these purposes. The company boasts that its solution can detect value creation opportunities, off market deals, distress signals, and other performance anomalies.
5. Data Analysis
As CRE firms grow, they acquire massive amounts of data regarding lease abstractions, property appraisals, offering circulars, ownership history records, zoning regulations, tax reports, etc. As this data grows, AI can be used to classify and store documents in a manageable way. Machine learning applications in real estate can even send proactive reminders or notifications, for example when a new appraisal is due or a property suddenly skyrockets in popularity.
Stay Competitive in CRE with AI
According to the Altus Group report, two of the biggest hurdles for CRE firms when it comes to new technology is a lack of internal capability and lack of appetite from the company to invest in it. These property technology (proptech) challenges need to be overcome, because according to PwC, “Proptech will soon not be a novel concept. Technology will be embedded in all aspects of real estate.”
Don’t be left behind. Take advantage of the exciting possibilities of AI as a powerful tool in commercial real estate that can help your firm as well as CRE tenants, buyers, sellers, and investors. Remember, by adopting a proactive "technology-first" attitude, CRE firms can maintain and grow their competitive advantage in our ever-evolving industry.