Because it is everyone’s favorite buzzword these days, we started thinking about how Artificial Intelligence (AI) will/could impact the commercial real estate (CRE) market. It might surprise you to know that it already does impact CRE and has for several years. Looking forward, here are 10 ways that AI will potentially be used to enhance decision-making and the CRE industry:
- Data-driven decision-making: AI can process vast amounts of data quickly and identify patterns and trends that humans might miss (and perhaps vice versa). In the commercial real estate sector, this can help investors, developers, and brokers make more informed decisions about property investments, pricing, and market analysis.
- Predictive analytics: AI-powered predictive models can anticipate market changes, property value fluctuations, and tenant demand, assisting stakeholders in strategizing their investments and maximizing returns. This capability can work hand-in-hand with the CRE agent’s knowledge of their local real estate market.
- Property search and recommendations: AI-powered platforms and applications can and do provide personalized property recommendations to potential buyers or tenants based on their preferences and requirements, streamlining the search process. However, we don’t see AI being able to read an individual’s personality, preferences, likes, and dislikes.
- Enhanced customer experience: AI chatbots and virtual assistants can be used to handle inquiries, provide property information, and assist with administrative tasks, sometimes improving customer service and responsiveness in the industry. This one can arguably also be a detriment to a good customer experience. How many of us have been frustrated by chatbots when all we want to do is talk to a human?
- Risk assessment and mitigation: AI can aid in assessing the risks associated with property investments, considering factors such as location, market trends, and potential environmental hazards. We believe this one should always have a human element involved. No AI has lived or worked day-to-day in the cities, towns, and communities that CRE professionals have.
- Smart building management: AI can help optimize building operations by monitoring energy usage, predicting maintenance needs, and enhancing security through advanced surveillance systems.
- Lease optimization: AI can analyze lease agreements, identify relevant clauses, and suggest improvements or amendments to ensure optimal terms for both landlords and tenants. Again, part of a seasoned CRE professional’s job is to make sure that their clients are protected and human involvement is highly recommended.
- Property valuation: AI-powered algorithms can help determine property values more accurately, considering various factors that impact pricing, such as location, nearby amenities, and historical transaction data. Our notes? See #5 above…
- Market transparency: AI can facilitate access to market data, providing real-time insights into commercial property prices, vacancy rates, and other key indicators, making the market more transparent and efficient. We see this as a tool in the CRE professional’s toolbelt, enhancing the services they provide to their clients.
- Disruption and job transformation: While AI brings efficiency and productivity gains, it may also lead to certain job transformations and displacements in the commercial real estate sector. Routine tasks like data entry, research, and administrative functions might be automated, requiring professionals to adapt to new roles that leverage AI capabilities.
The extent of AI’s impact on the commercial real estate market depends on the industry’s readiness to adopt and integrate new technologies, regulatory considerations, and the evolution of AI capabilities. We see it as an opportunity to enhance the capabilities of CRE professionals, their associates, and clients. AI will never be able to replace the human element CRE professionals provide, including their in-depth knowledge of local CRE markets.For help from professionals who know the front-range CRE market, contact us today. Follow us! Further reading here from adventuresincre.com