These Are Some CRE Areas Where AI May Become Important

Artificial intelligence has become the new great hype in technology, a position that different highly promoted advances in computers, data, and communications have held over the decades. The basic computer itself was once the promise of the future.

And it ultimately fulfilled the role, although like all technologies it takes significant amounts of time for capabilities to progress enough and for people to understand them and the novel capabilities they bring to industries.

When it comes to commercial real estate, according to new report by PwC and the Urban Land Institute, AI in CRE has been far from the pictures painted by vendors and consultants. “Despite the hype and popular attention on artificial intelligence, actual CRE uses appear to be limited and most mundane to date,” they wrote. These uses currently include drafting and editing content, like pitch decks and memos.

However, that is the current moment, which will change, given how companies are pressured to reduce costs and headcounts. The more companies can automate functions, the more they will. “The range and sophistication of industry uses are likely to expand quickly, given the promise of the technology and the volume of venture capital investment going into the sector,” the report added. “Many firms are already experimenting with potential applications, which are likely to be as diverse as the real estate industry itself—from building and designing to operating and managing, leasing and selling, analyzing and forecasting.”

Some companies that responded to the study’s survey work mentioned mining large datasets for better investment and development decisions. One mentioned moving away from frequency counts and instead using more sophisticated Bayesian probability models that can adapt to changing conditions.

“AI could be used to develop superior portfolio construction strategies with predictive models that guide fund managers on how different property types and markets are likely to interact. And after the acquisition, owners eventually will be able to harness AI to manage their assets better,” they wrote.”

But as previous waves of technology prove, there are big considerations before jumping into some exciting-sounding area. Understand what the technology is doing so you can grasp its weaknesses and strengths — what it can and cannot do. Plan in advance how a new approach will work with existing business processes. And, as the report mentioned, AI could well displace some CRE employees. Might a business lose important institutional knowledge that software can’t replace?