Innovation is transforming the face of every industry, even those rooted in tradition like commercial real estate (CRE). This was particularly clear during the recent RETCON 2024 conference, where AI in CRE was a main talking point throughout the event.
It begs the question: Are we standing at the precipice of a technological revolution in CRE, or navigating the early stages of a complex, long-term transformation? Experts shared plenty of insights during RETCON 2024 in attempt to answer that question.
Rapid growth of AI in CRE
Nick Hayden, Senior Director at JLL, said during his “Transforming Commercial Real Estate through AI” presentation at RETCON 2024 that “the only thing growing faster than AI are the experts managing AI.” He underscored the role of technology in creating new jobs, sharing that more than 85% of employment growth in the U.S. over the last 80 years is explained by the tech-driven creation of new jobs.
According to Hayden, AI not only has the potential to rearrange the fabric of CRE but also transform how people live, work, and play, reshaping the industry over time. While AI is seen as a game-changer by many, its potential is largely untapped with understanding of its true capabilities remaining low.
“The rate of change is accelerating,” Hayden said, adding that “enterprise applications are expected to emerge in the near future.”
AI reality check
Josh Panknin from Columbia University Engineering, on the other hand, provided an objective perspective on AI during his RETCON 2024 presentation, “Get Past the AI Hype & Focus on the Fundamentals.”
“There are lots of big claims about solving big problems with only vague descriptions on how to actually do it,” Panknin said. He emphasized that most real estate companies are at the starting line with AI. He warned that rushing for quick outcomes could prove risky.
AI and its subfields, Panknin said, are “math, not magic.” The machines deal with numbers, not sentiments or perceptions. He pointed out the critical gap between how AI is discussed in the industry and what it takes to develop and efficiently implement these tools.
That said, Panknin highlighted strategic questions a company must consider before embarking on implementing AI:
- Will this AI tool actually bring value?
- Do I have the resources to execute?
He underlined the importance of assessing both operational and strategic value of any AI implementation. That is, efficiency and competitive advantage should be key drivers. He further emphasized the importance of evaluating technical feasibility by asking: “Do I have the right data? Is the data clean and accurate?”
Reflecting on the complexity of the problems faced while implementing AI, Panknin said, “As problems get more complex, so does the math, engineering, and resources needed.” He cautioned that the major effects of real estate are external to the property itself. Due to these complexities, holistic solutions need to be sought out while taking all external factors into consideration.
AI in CRE
The overarching message? AI holds immense potential for the commercial real estate industry. However, tapping into its full potential requires understanding, strategic planning, and careful execution. This underscores the need for CRE professionals to continue to explore and embrace AI while also clearly understanding its limitations and complexities.
The future of AI in CRE is promising and exciting. Can we build a bridge between potential and reality? Your next strategic decisions may hold the key.
Want more insights about AI in CRE and proptech? Watch the on-demand webinar, “Unlocking your building’s value: How technology is your best competitive advantage.”
