Exploring the current and future impact of AI on commercial real estate.
✨ Article summary: Artificial intelligence is transforming commercial real estate, enhancing market analysis, property management, and customer relationship management. Early adopters leverage AI for data-driven decision-making and strategic planning, with firms like JLL and CBRE using AI to optimize building operations and investment opportunities. Future trends include advanced AI technologies improving forecasting, risk management, and tenant experiences, though challenges to adoption remain.
In recent years, artificial intelligence has emerged as a powerful force reshaping industries across the globe. In the commercial real estate space, as in so many others, AI is disrupting traditional practices and creating new opportunities for efficiency and innovation.
From its earlier phase as a tool for basic data analysis to its current state as a sophisticated predictive analytics engine, AI has come a long way in a short time.
Early adopters and pioneers in the field aim to harness the potential of AI to revolutionize CRE operations, leveraging advanced algorithms to gain valuable insights into market trends, property performance, and investment opportunities.
As with any new technology, it’s easy to fall from speculation into hype. “AI” is freely used as a marketing term, even when the underlying tech is not technically using artificial intelligence.
Still, we’re already seeing the widespread adoption of AI across the industry in one way or another, paving the way for a new era of data-driven decision-making and strategic planning. Read on to learn more about the current applications of AI in commercial real estate, future trends to watch, and the challenges that accompany AI adoption.
From market analysis and property valuation to asset management and tenant engagement, AI has permeated every aspect of the CRE deal cycle. Here are three key areas where AI helps with the day-to-day work of commercial real estate transactions:
Data analysis and market forecasting: Use of AI algorithms to analyze market trends, predict property values, and identify investment opportunities.
Property management and operations: Implementation of AI-driven solutions for property maintenance, energy management, and security.
Customer relationship management (CRM): Utilization of AI-powered CRM systems to manage client interactions, track leads, and personalize marketing strategies. AI can be a useful tool to digest information about a prospect ahead of reaching out, to draft outbound comms in the early stages of a deal, and to maintain customer relationships throughout the deal cycle.
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Leading commercial real estate firms are already exploring the power of AI to gain a competitive edge, utilizing sophisticated tools and platforms to analyze vast amounts of data, identify trends, and uncover actionable insights.
One recent example is JLL GPT, launched in 2023, the first large language model (LLM) tailored for commercial real estate. Available to all JLL employees, it’s used for client support and customized solutions, complementing existing AI solutions that optimize building operations, visualize leasing scenarios, evaluate sustainability risks, and facilitate investment opportunities.
CBRE's Smart Facilities Management (FM) Solutions, powered by AI and advanced analytics, reached a milestone last year of deployment across 20,000 client sites, totaling 1 billion square feet. CBRE uses AI to optimize workflows, reduce costs, and enhance occupant experiences through virtual maintenance, automated maintenance, and dynamic services.
Companies outside the biggest firms are increasingly folding AI into their tech stack. Some use AI-driven algorithms to gather lease comp data and conduct accurate market comparisons, empowering brokers and investors with valuable market insights and competitive intelligence. Other companies use AI for services including forecasting occupancy rates, rental trends, and revenue projections, enabling property owners and managers to optimize asset performance and maximize returns.
Looking ahead, the future of AI in commercial real estate holds immense promise, with emerging technologies and innovations poised to revolutionize the industry once again.
Advanced technologies such as natural language processing (NLP), computer vision, and predictive modeling are expected to drive significant advancements in day-to-day commercial real estate operations, enabling more accurate forecasting, enhanced risk management, and personalized customer experiences.
For example, the integration of AI-driven smart building technologies is set to transform the way buildings are designed, constructed, and managed, with AI-powered sensors and systems optimizing energy efficiency, space utilization, and tenant satisfaction.
The integration of VR and AR technologies in property visualization, virtual tours, and remote collaboration presents another frontier where AI can aid development.
Leading developers and property managers are embracing AI as a strategic asset, investing in cutting-edge solutions that leverage the power of data and analytics to create smarter, more sustainable built environments.
While AI has undoubtedly made significant strides in reshaping the commercial real estate industry, challenges and considerations accompany its widespread adoption.
Issues such as data privacy, algorithm bias, and the potential displacement of certain job functions need to be carefully navigated.
The rapid pace of technological advancement demands ongoing adaptation and upskilling among industry professionals, whether it’s learning to interact with an AI chatbot, or using AI for data analysis.
You also need to be careful to separate AI fact from hype. Not all solutions labeled "AI-powered" are equally powerful. Some companies may tout AI capabilities when, in reality, they are leveraging older technologies for basic data analysis. Discerning between genuine AI-driven innovations and marketing-driven exaggerations is essential for making informed decisions to maximize the value of your tech investments.
Despite these challenges, the potential benefits of AI adoption in commercial real estate are already being seen in improved operational efficiency, enhanced decision-making capabilities, and personalized customer experiences. As stakeholders continue to explore and leverage AI-driven solutions, we expect this will become an increasingly important part of every brokerage team’s tech stack. By embracing AI as a strategic asset and staying current of the latest developments and trends, CRE professionals can position themselves for success in an increasingly digital landscape.
