Michael Milken addressed a class at Wharton. He advanced the precept that prosperity is the application of technology to people, things, and ideas. The application of AI to human capital, intellectual capital, and real assets is in the formation stage. Application of AI to real estate is expected to materially impact commercial real estate (CRE) financing, acquisitions, management, and dispositions.. While it is difficult to predict the exact nature of all these changes, some potential applications and implications include:
- Property search and acquisition: AI-powered platforms can streamline property searches by analyzing listings, suitability for recommendations based on user preferences, and identifying optimal transactions. These tools may also offer better predictions of property values and return on investment. GSE and climate issues can also be managed through AI.
- Lease management and administration: AI systems can help automate lease administration tasks, such as contract analysis, rent collection, and lease renewals. This can lead to improved efficiency and reduced operational costs for property managers and landlords.
- Building management and operations: AI can be used to optimize building performance through energy management systems, predictive maintenance, and IoT-enabled devices. This can result in energy savings, lower maintenance costs, and a better overall occupant experience.
- Tenant experience: AI-powered chatbots and virtual assistants can enhance the tenant experience by providing quick and personalized support. This can help improve tenant satisfaction and retention.
- Market analysis and forecasting: AI-driven data analytics can be used to identify trends, patterns, and potential opportunities in the CRE market. This can help investors and developers make more informed decisions about where and when to invest.
- Risk assessment and mitigation: AI can help identify potential risks associated with a property or investment, such as environmental hazards or financial risks, and suggest possible mitigation strategies.
- Urban planning and development: AI-based simulation models can help city planners and developers evaluate the potential impact of new projects on surrounding areas, traffic patterns, and infrastructure. AI can analyze politics, entitlements, zoning changes, financing mechanisms for infrastructure, stakeholder interest, and other variables for project approvals and public policies. This can lead to more effective urban planning and development. Issues like affordable housing, homelessness, and climate change will be part of the deep learning future.
Although AI has the potential to greatly impact the commercial real estate industry, it is essential to consider the ethical implications and ensure that these technologies are developed and deployed responsibly. This includes addressing concerns related to privacy, data security, and potential biases in AI algorithms.
Heritage CRETECH is doing a deep dive into the application of technology to commercial real estate, including Artificial Intelligence. Stay tuned for announcements about our investments in the space.